TRUST SCHOOL 1 AUSTIN EXAM
QUESTIONS ANSWER
Your client owns a $200,000 home in joint tenancy, a $15,000 car in his own name, an
$8,000 CD in his name alone, and a $100,000 life insurance policy with a cash value of
$10,000, payable to his wife. What is the value of his probate estate?
A. $23,000
B. $33,000
C. $223,000
D. $333,000 - Correct Answers -A. $23,000
Your client creates a $2,000,000 Grantor Retained Annuity Trust for a 10-year term
paying an 8% annuity. If the present value of the grantor's retained annuity stream is
$1,045,150, what is the value of the taxable gift?
A. $438,230
B. $653,220
C. $954,850
D. $1,045,150 - Correct Answers -C. $954,850
A gift of income to charity with remainder to children is an example of which of the
following?
A. Charitable Bequest
B. Charitable Remainder Trust
C. Charitable Lead Trust
D. Private Foundation - Correct Answers -C. Charitable Lead Trust
Beneficiaries should be notified in writing upon funding of which of the following types of
trusts?
A. Revocable Grantor Trust
B. Irrevocable trust with Crummey provisions
C. 2503(c) trust for minors
D. Charitable Remainder Unitrust - Correct Answers -B. Irrevocable trust with Crummey
provisions
,Which of the following best describes amounts payable to the income beneficiary of a
Charitable Remainder Annuity Trust?
A. Will fluctuate with the market value of the trust.
B. Remain the same every year.
C. Fluctuate with the federal mid-term rate.
D. Are altered by income earned. - Correct Answers -B. Remain the same every year.
Appreciated assets donated to a public charity may be deducted from income up to
which of the following amounts?
A. 30% of adjusted gross income (AGI)
B. 60% of adjusted gross income (AGI)
C. 30% of the value of the assets donated
D. 60% of the value of the assets donated - Correct Answers -A. 30% of adjusted gross
income (AGI)
A simple trust earned $27,000 in dividends. It paid $4,000 in trustee fees, one-half from
income and one-half from principal. Trust accounting income is which of the following?
A. $0
B. $23,000
C. $25,000
D. $27,000 - Correct Answers -C. $25,000
If the Trust Document is silent with respect to a certain cash transaction, the Trust
Administrator should first look to which of the following for guidance?
A. Court of Jurisdiction
B. Principal and Income Law of the State
C. Grantor
D. OCC - Correct Answers -B. Principal and Income Law of the State
When determining a long-term sustainable rate of return for a unitrust payout, which of
the following best represents the range of high confidence payout percentages?
A. 1-2%
B. 2-3%
C. 3-5%
D. 120% of the federal midterm rate - Correct Answers -C. 3-5%
Which of the following is an example of tangible personal property?
A. Gold bar
B. Common stock certificate
, C. Patent
D. Vacant land - Correct Answers -A. Gold bar
Which of the following is an example of tangible personal property?
A. Family residence
B. IBM stock
C. Jewelry
D. Rental house - Correct Answers -C. Jewelry
A to B for life, then to C. Following this transfer, which of the following is true?
A. A has a fee simple interest.
B. B has a reversionary interest.
C. C has a remainder interest.
D. C has a life estate. - Correct Answers -C. C has a remainder interest.
Under joint tenants with rights of survivorship, when one tenant dies which of the
following best describes the result?
A. Her share passes through her will to her heirs.
B. Her share passes by law to her heirs, not through her will.
C. Her share passes to the surviving joint tenant regardless of what her will says.
D. The asset must be sold and the estate gets 1/2 of the proceeds. - Correct Answers -
C. Her share passes to the surviving joint tenant regardless of what her will says.
A decedent owns $400,000 in his own name, a $200,000 home in joint tenancy with his
spouse and a $100,000 life insurance policy with the children as beneficiaries. Which of
the following is the amount passing through probate?
A. $0.
B. $400,000.
C. $500,000.
D. $700,000 - Correct Answers -B. $400,000.
In cutting down a tree, which of the following occurs?
A. Real property is converted to personal property.
B. Personal property is converted to real property.
C. Real property is converted to a fixture.
D. There is no conversion, the tree remains real property - Correct Answers -A. Real
property is converted to personal property.
Which of the following transfers are includable in the gross estate of the donor if made
within 3 years of death?
QUESTIONS ANSWER
Your client owns a $200,000 home in joint tenancy, a $15,000 car in his own name, an
$8,000 CD in his name alone, and a $100,000 life insurance policy with a cash value of
$10,000, payable to his wife. What is the value of his probate estate?
A. $23,000
B. $33,000
C. $223,000
D. $333,000 - Correct Answers -A. $23,000
Your client creates a $2,000,000 Grantor Retained Annuity Trust for a 10-year term
paying an 8% annuity. If the present value of the grantor's retained annuity stream is
$1,045,150, what is the value of the taxable gift?
A. $438,230
B. $653,220
C. $954,850
D. $1,045,150 - Correct Answers -C. $954,850
A gift of income to charity with remainder to children is an example of which of the
following?
A. Charitable Bequest
B. Charitable Remainder Trust
C. Charitable Lead Trust
D. Private Foundation - Correct Answers -C. Charitable Lead Trust
Beneficiaries should be notified in writing upon funding of which of the following types of
trusts?
A. Revocable Grantor Trust
B. Irrevocable trust with Crummey provisions
C. 2503(c) trust for minors
D. Charitable Remainder Unitrust - Correct Answers -B. Irrevocable trust with Crummey
provisions
,Which of the following best describes amounts payable to the income beneficiary of a
Charitable Remainder Annuity Trust?
A. Will fluctuate with the market value of the trust.
B. Remain the same every year.
C. Fluctuate with the federal mid-term rate.
D. Are altered by income earned. - Correct Answers -B. Remain the same every year.
Appreciated assets donated to a public charity may be deducted from income up to
which of the following amounts?
A. 30% of adjusted gross income (AGI)
B. 60% of adjusted gross income (AGI)
C. 30% of the value of the assets donated
D. 60% of the value of the assets donated - Correct Answers -A. 30% of adjusted gross
income (AGI)
A simple trust earned $27,000 in dividends. It paid $4,000 in trustee fees, one-half from
income and one-half from principal. Trust accounting income is which of the following?
A. $0
B. $23,000
C. $25,000
D. $27,000 - Correct Answers -C. $25,000
If the Trust Document is silent with respect to a certain cash transaction, the Trust
Administrator should first look to which of the following for guidance?
A. Court of Jurisdiction
B. Principal and Income Law of the State
C. Grantor
D. OCC - Correct Answers -B. Principal and Income Law of the State
When determining a long-term sustainable rate of return for a unitrust payout, which of
the following best represents the range of high confidence payout percentages?
A. 1-2%
B. 2-3%
C. 3-5%
D. 120% of the federal midterm rate - Correct Answers -C. 3-5%
Which of the following is an example of tangible personal property?
A. Gold bar
B. Common stock certificate
, C. Patent
D. Vacant land - Correct Answers -A. Gold bar
Which of the following is an example of tangible personal property?
A. Family residence
B. IBM stock
C. Jewelry
D. Rental house - Correct Answers -C. Jewelry
A to B for life, then to C. Following this transfer, which of the following is true?
A. A has a fee simple interest.
B. B has a reversionary interest.
C. C has a remainder interest.
D. C has a life estate. - Correct Answers -C. C has a remainder interest.
Under joint tenants with rights of survivorship, when one tenant dies which of the
following best describes the result?
A. Her share passes through her will to her heirs.
B. Her share passes by law to her heirs, not through her will.
C. Her share passes to the surviving joint tenant regardless of what her will says.
D. The asset must be sold and the estate gets 1/2 of the proceeds. - Correct Answers -
C. Her share passes to the surviving joint tenant regardless of what her will says.
A decedent owns $400,000 in his own name, a $200,000 home in joint tenancy with his
spouse and a $100,000 life insurance policy with the children as beneficiaries. Which of
the following is the amount passing through probate?
A. $0.
B. $400,000.
C. $500,000.
D. $700,000 - Correct Answers -B. $400,000.
In cutting down a tree, which of the following occurs?
A. Real property is converted to personal property.
B. Personal property is converted to real property.
C. Real property is converted to a fixture.
D. There is no conversion, the tree remains real property - Correct Answers -A. Real
property is converted to personal property.
Which of the following transfers are includable in the gross estate of the donor if made
within 3 years of death?
