Cannon Trust School 2- GST Quizzes with Solutions.
1. Bob intends to make gifts to the following. Which of the following will qualify for the
generation-skipping tax predeceased ancestor exception?
A. The children of his living children.
B. The child of his deceased child.
C. His grandnephew (whose parents are deceased).
D. His niece, if his brother is deceased. correct answers B. The child of his deceased child.
2. Generation skipping transfers occur in which of the following circumstances?
A. Only between family members.
B. Only between non-family members.
C. Only between persons over 37 1/2 years apart in age.
D. Only when assets aren't subject to gift or estate tax in the middle generation. correct answers
D. Only when assets aren't subject to gift or estate tax in the middle generation.
3. Allocation of the generation skipping transfer tax exemption for an irrevocable trust subject to
a taxable termination is made by which of the following?
A. Donor (or donor's estate) at the time the trust terminates.
B. Donee at the time the donee receives the property.
C. Donor (or donor's estate) at the time the trust is funded.
D. Donee at the time the trust is funded. correct answers C. Donor (or donor's estate) at the time
the trust is funded.
4. The generation skipping transfer tax rules apply only to which of the following?
A. Property left in trusts that exceed the rule against perpetuity.
B. Property passing two or more generations below the grantor.
C. Family members of the decedent.
D. All persons 37 1/2 years younger than the grantor. correct answers B. Property passing two or
more generations below the grantor.
5. Which of the following BEST describes the rate at which the generation skipping transfer tax
is applied?
A. At varying, progressive rates according to the unified transfer tax rate schedule applicable at
the time.
, B. Only at the lowest estate tax rate applicable at the time.
C. Only at the highest estate tax rate applicable at the time.
D. Based on the size and nature of the transfer. correct answers C. Only at the highest estate tax
rate applicable at the time.
6. Which of the following is TRUE of the GSTT Exemption?
A. The GSTT Exemption is not indexed for inflation.
B. The GSTT Exemption is more than the Applicable Exclusion Amount.
C. The GSTT Exemption is indexed for inflation.
D. The GSTT Exemption is less than the Applicable Exclusion Amount. correct answers C. The
GSTT Exemption is indexed for inflation.
7. A client is looking to establish an irrevocable trust that provides income to his spouse for life,
then income to his children for life, with the remainder interest passing to his grandchildren. This
is an example of which of the following?
A. Crummey trust
B. Generation-skipping trust
C. Power of appointment marital deduction trust
D. Grantor retained annuity trust correct answers B. Generation-skipping trust
8. Grandparents establish a trust for the benefit of children, children's spouses, and
grandchildren. If the trustee pays $50,000 directly to Princeton University for a grandchild's
tuition, this payment should be characterized as a $50,000:
A. Direct Skip.
B. Taxable Distribution.
C. Unlimited Exclusion Payment.
D. Taxable Termination. correct answers C. Unlimited Exclusion Payment.
9. On October 22, 1986, Grandmother became comatose. She died on January 1, this year. Her
will gave each of her five grandchildren $2,000,000 outright. She also established a $20,000,000
trust for the benefit of her children, her children's spouses, and their issue. To which transfers
should her executor allocate the generation-skipping transfer (GST) exemption?
A. To the direct skips, the $2,000,000 per grandchild gifts.
B. To the $20,000,000 trust.
C. One-half to the direct skip, one-half to the trust.
D. None, because her estate is grandfathered and not subject to GST tax. correct answers D.
None, because her estate is grandfathered and not subject to GST tax.
1. Bob intends to make gifts to the following. Which of the following will qualify for the
generation-skipping tax predeceased ancestor exception?
A. The children of his living children.
B. The child of his deceased child.
C. His grandnephew (whose parents are deceased).
D. His niece, if his brother is deceased. correct answers B. The child of his deceased child.
2. Generation skipping transfers occur in which of the following circumstances?
A. Only between family members.
B. Only between non-family members.
C. Only between persons over 37 1/2 years apart in age.
D. Only when assets aren't subject to gift or estate tax in the middle generation. correct answers
D. Only when assets aren't subject to gift or estate tax in the middle generation.
3. Allocation of the generation skipping transfer tax exemption for an irrevocable trust subject to
a taxable termination is made by which of the following?
A. Donor (or donor's estate) at the time the trust terminates.
B. Donee at the time the donee receives the property.
C. Donor (or donor's estate) at the time the trust is funded.
D. Donee at the time the trust is funded. correct answers C. Donor (or donor's estate) at the time
the trust is funded.
4. The generation skipping transfer tax rules apply only to which of the following?
A. Property left in trusts that exceed the rule against perpetuity.
B. Property passing two or more generations below the grantor.
C. Family members of the decedent.
D. All persons 37 1/2 years younger than the grantor. correct answers B. Property passing two or
more generations below the grantor.
5. Which of the following BEST describes the rate at which the generation skipping transfer tax
is applied?
A. At varying, progressive rates according to the unified transfer tax rate schedule applicable at
the time.
, B. Only at the lowest estate tax rate applicable at the time.
C. Only at the highest estate tax rate applicable at the time.
D. Based on the size and nature of the transfer. correct answers C. Only at the highest estate tax
rate applicable at the time.
6. Which of the following is TRUE of the GSTT Exemption?
A. The GSTT Exemption is not indexed for inflation.
B. The GSTT Exemption is more than the Applicable Exclusion Amount.
C. The GSTT Exemption is indexed for inflation.
D. The GSTT Exemption is less than the Applicable Exclusion Amount. correct answers C. The
GSTT Exemption is indexed for inflation.
7. A client is looking to establish an irrevocable trust that provides income to his spouse for life,
then income to his children for life, with the remainder interest passing to his grandchildren. This
is an example of which of the following?
A. Crummey trust
B. Generation-skipping trust
C. Power of appointment marital deduction trust
D. Grantor retained annuity trust correct answers B. Generation-skipping trust
8. Grandparents establish a trust for the benefit of children, children's spouses, and
grandchildren. If the trustee pays $50,000 directly to Princeton University for a grandchild's
tuition, this payment should be characterized as a $50,000:
A. Direct Skip.
B. Taxable Distribution.
C. Unlimited Exclusion Payment.
D. Taxable Termination. correct answers C. Unlimited Exclusion Payment.
9. On October 22, 1986, Grandmother became comatose. She died on January 1, this year. Her
will gave each of her five grandchildren $2,000,000 outright. She also established a $20,000,000
trust for the benefit of her children, her children's spouses, and their issue. To which transfers
should her executor allocate the generation-skipping transfer (GST) exemption?
A. To the direct skips, the $2,000,000 per grandchild gifts.
B. To the $20,000,000 trust.
C. One-half to the direct skip, one-half to the trust.
D. None, because her estate is grandfathered and not subject to GST tax. correct answers D.
None, because her estate is grandfathered and not subject to GST tax.
