ALU 202 - MID-YEAR PRACTICE EXAM (LION'S STREET) 120+
QUESTIONS AND ANSWERS|2025 UPDATE
1. All of the following are financial objectives of a 3) income replacement
well-planned estate EXCEPT:
1) maximized wealth
2) tax savings
3) income replacement
4) appropriate asset ownership
2. A legal agreement whereby property is held and man- 2) trust
aged for the welfare of the beneficiary is:
1) estate
2) trust
3) situs
4) partnership
3. The basis from which to determine whether an indi- 1) taxable estate
vidual is subject to the estate tax is:
1) taxable estate
2) fair market value of the personal property
3) total income
4) business assets only
4. All of the following statements regarding special use 1) Some property is taxed
valuation are correct EXCEPT: based upon potential uses
1) Some property is taxed based upon potential uses
2) Property value is assessed according to its current
use
3) The value of stocks/bonds are the price upon the
date of death
,ALU 202 - MID-YEAR PRACTICE EXAM (LION'S STREET) 120+
QUESTIONS AND ANSWERS|2025 UPDATE
4) Life insurance products set aside for the benefit of
the decedent's estate are taxed as part of the estate
5. Examples of income with respect to the decedent 4) gains received from the
(IRD) include all of the following EXCEPT: sale of the property
1) uncollected lottery winnings
2) outstanding stock dividends
3) accounts receivables from a cash basis sole propri-
etor
4) gains received from the sale of the property
6. All of the following are factors to consider in a chari- 3) the state in which the
table giving application for life insurance EXCEPT: charitable trust was estab-
lished
1) past history of charitable contributions
2) amount of annual contributions
3) the state in which the charitable trust was estab-
lished
4) the annual premium as a percentage of client's
annual income
7. Foreign assets owned by former US citizens: 2) generate a decreasing
proportional estate tax for
1) do not generate estate tax once US citizenship is 10 yrs after US citizenship
renounced is renounced
2) generate a decreasing proportional estate tax for
10 yrs after US citizenship is renounced
3) are completely exempt from estate taxes if all assets
are located outside of the US
4) generate an increasing proportional estate tax for
10 yrs after renouncing US citizenship
,ALU 202 - MID-YEAR PRACTICE EXAM (LION'S STREET) 120+
QUESTIONS AND ANSWERS|2025 UPDATE
8. All of the following are characteristics of the Irrevoca- 3) grantor retains incident
ble Trust EXCEPT: of ownership of the trust
1) trust assets are not vulnerable to the grantor's cred-
itors
2) assets removed from the estate and put into the
trust reduce the size of the estate and the estate tax
3) grantor retains incident of ownership of the trust
4) income generated by the trust assets is taxed to
the trust, often at a lower rate than received by the
grantor
9. All of the following statements regarding the rule 3) Public trusts cannot ex-
against perpetuities are correct EXCEPT: ist for more than 21 yrs af-
ter creation
1) Certain charitable trusts can exist for an unlimited
period of time
2) Private trusts can exist for a period not to exceed 21
yrs after the creation of the trust
3) Public trusts cannot exist for more than 21 yrs after
creation
4) Charitable trusts must not name a specific individ-
ual or individuals are beneficiary
10. All of the following are valid reasons for purchasing 3) estate creation
life insurance on an elderly individual EXCEPT:
1) estate transfer
2) long term care needs
3) estate creation
4) final expenses
11.
, ALU 202 - MID-YEAR PRACTICE EXAM (LION'S STREET) 120+
QUESTIONS AND ANSWERS|2025 UPDATE
All of the following statements regarding charitable 1) It's a type of revocable
trusts are correct EXCEPT: trust
1) It's a type of revocable trust
2) Assets placed in are managed on behalf of the
charity
3) The life insurance policy on the grantor can be made
an asset of the trust
4) It's not subject to the rule against perpetuities
12. All of the following are allowable deductions when 2) membership dues
calculating the adjusted gross estate EXCEPT:
1) funeral expenses
2) membership dues
3) medical expenses
4) mortgage debt
13. Which of the following statements regarding the pur- All are correct
pose of life insurance in estate planning is/are cor-
rect?
A) Life insurance can replace assets lost due to estate
transfer costs
B) It can transfer assets such as the purchase of an
illiquid asset from the estate with the death proceeds
C) Life insurance can increase assets, as happens in
private placement insurance
14. Which of the following is/are jurisdictional premises A) citizenship
that can trigger the imposition of estate tax? B) residency
A) citizenship
QUESTIONS AND ANSWERS|2025 UPDATE
1. All of the following are financial objectives of a 3) income replacement
well-planned estate EXCEPT:
1) maximized wealth
2) tax savings
3) income replacement
4) appropriate asset ownership
2. A legal agreement whereby property is held and man- 2) trust
aged for the welfare of the beneficiary is:
1) estate
2) trust
3) situs
4) partnership
3. The basis from which to determine whether an indi- 1) taxable estate
vidual is subject to the estate tax is:
1) taxable estate
2) fair market value of the personal property
3) total income
4) business assets only
4. All of the following statements regarding special use 1) Some property is taxed
valuation are correct EXCEPT: based upon potential uses
1) Some property is taxed based upon potential uses
2) Property value is assessed according to its current
use
3) The value of stocks/bonds are the price upon the
date of death
,ALU 202 - MID-YEAR PRACTICE EXAM (LION'S STREET) 120+
QUESTIONS AND ANSWERS|2025 UPDATE
4) Life insurance products set aside for the benefit of
the decedent's estate are taxed as part of the estate
5. Examples of income with respect to the decedent 4) gains received from the
(IRD) include all of the following EXCEPT: sale of the property
1) uncollected lottery winnings
2) outstanding stock dividends
3) accounts receivables from a cash basis sole propri-
etor
4) gains received from the sale of the property
6. All of the following are factors to consider in a chari- 3) the state in which the
table giving application for life insurance EXCEPT: charitable trust was estab-
lished
1) past history of charitable contributions
2) amount of annual contributions
3) the state in which the charitable trust was estab-
lished
4) the annual premium as a percentage of client's
annual income
7. Foreign assets owned by former US citizens: 2) generate a decreasing
proportional estate tax for
1) do not generate estate tax once US citizenship is 10 yrs after US citizenship
renounced is renounced
2) generate a decreasing proportional estate tax for
10 yrs after US citizenship is renounced
3) are completely exempt from estate taxes if all assets
are located outside of the US
4) generate an increasing proportional estate tax for
10 yrs after renouncing US citizenship
,ALU 202 - MID-YEAR PRACTICE EXAM (LION'S STREET) 120+
QUESTIONS AND ANSWERS|2025 UPDATE
8. All of the following are characteristics of the Irrevoca- 3) grantor retains incident
ble Trust EXCEPT: of ownership of the trust
1) trust assets are not vulnerable to the grantor's cred-
itors
2) assets removed from the estate and put into the
trust reduce the size of the estate and the estate tax
3) grantor retains incident of ownership of the trust
4) income generated by the trust assets is taxed to
the trust, often at a lower rate than received by the
grantor
9. All of the following statements regarding the rule 3) Public trusts cannot ex-
against perpetuities are correct EXCEPT: ist for more than 21 yrs af-
ter creation
1) Certain charitable trusts can exist for an unlimited
period of time
2) Private trusts can exist for a period not to exceed 21
yrs after the creation of the trust
3) Public trusts cannot exist for more than 21 yrs after
creation
4) Charitable trusts must not name a specific individ-
ual or individuals are beneficiary
10. All of the following are valid reasons for purchasing 3) estate creation
life insurance on an elderly individual EXCEPT:
1) estate transfer
2) long term care needs
3) estate creation
4) final expenses
11.
, ALU 202 - MID-YEAR PRACTICE EXAM (LION'S STREET) 120+
QUESTIONS AND ANSWERS|2025 UPDATE
All of the following statements regarding charitable 1) It's a type of revocable
trusts are correct EXCEPT: trust
1) It's a type of revocable trust
2) Assets placed in are managed on behalf of the
charity
3) The life insurance policy on the grantor can be made
an asset of the trust
4) It's not subject to the rule against perpetuities
12. All of the following are allowable deductions when 2) membership dues
calculating the adjusted gross estate EXCEPT:
1) funeral expenses
2) membership dues
3) medical expenses
4) mortgage debt
13. Which of the following statements regarding the pur- All are correct
pose of life insurance in estate planning is/are cor-
rect?
A) Life insurance can replace assets lost due to estate
transfer costs
B) It can transfer assets such as the purchase of an
illiquid asset from the estate with the death proceeds
C) Life insurance can increase assets, as happens in
private placement insurance
14. Which of the following is/are jurisdictional premises A) citizenship
that can trigger the imposition of estate tax? B) residency
A) citizenship
