Cannon Trust School II EXAM LATEST (2025)
COMPLETE QUESTIONS With 100% Verified Solutions,
H's will creates a QTIP marital trust for the benefit of W. The trust provides that
W will receive all of the trust income, and will receive trust principal for her health
and support. W has a limited power of appointment over the trust. Bank X is
designated to serve as the sole trustee. At W's death, any income or principal she
received from the trust will be included in her gross estate. H's executor will make
a QTIP election for this trust on H's federal estate tax return. The marital trust:
A. will be included in W's gross estate at her death because W had a limited
power of appointment over the trust.
B. will be included in W's gross estate at her death because she was entitled to
receive distributions from trust principal for her health and support.
C. will not be included in W's gross estate at her death because a QTIP election
was made.
D. will be included in W's estate because a QTIP election was made. -
(ANSWER)D. will be included in W's estate because a QTIP election was made.
Which of the following is NOT a requirement of a QTIP trust?
A. All net accounting income to be paid to the surviving spouse at least annually.
B. Principal to be distributed at the trustee's discretion for the surviving spouse's
health, education, support, or maintenance.
C. The surviving spouse has the ability to require the trustee to convert non-
income producing assets to income productive assets.
,D. The surviving spouse may be the only permissible distributee during their
lifetime. - (ANSWER)B. Principal to be distributed at the trustee's discretion for
the surviving spouse's health, education, support, or maintenance.
In a pro rata fractional formula, which trust is frozen during administration prior
to funding?
A. The marital trust
B. The residual trust
C. Neither, they must share the appreciation/depreciation.
D. Both the marital and residual trusts. - (ANSWER)C. Neither, they must share
the appreciation/depreciation.
Which of the following is MANDATORY to qualify the general power of
appointment (GPA) marital deduction trust?
A. Right to encroach upon corpus of the marital deduction share by surviving
spouse during lifetime.
B. Ultimate distribution to decedent's heirs.
C. All net accounting income paid at least annually to the surviving spouse and
surviving spouse is given either lifetime GPA or testamentary GPA.
D. Surviving spouse has the right to make gifts from the marital deduction share
during lifetime. - (ANSWER)C. All net accounting income paid at least annually to
the surviving spouse and surviving spouse is given either lifetime GPA or
,testamentary GPA.
Which of the following is NOT a characteristic of a qualified domestic trust (QDT)?
A. At least one trustee must be a U.S. citizen or domestic corporation.
B. The executor of the donor's estate must irrevocably elect to have the trust
treated at a QDT.
C. The U.S. trustee must have the right to withhold federal estate taxes from any
principal distribution.
D. Upon termination of the trust, the U.S. trustee must file a final accounting with
the IRS and a tax at the maximum estate tax rate of the current fair market value
of the trust assets shall be assessed. - (ANSWER)D. Upon termination of the trust,
the U.S. trustee must file a final accounting with the IRS and a tax at the
maximum estate tax rate of the current fair market value of the trust assets shall
be assessed.
The duration of a life estate is BEST described as which of the following?
A. A fixed term
B. A life or the lives of one or more persons
C. Potentially infinite
D. Not to exceed 99 years - (ANSWER)B. A life or the lives of one or more persons
, Husband is not a U.S. citizen but is a resident alien. Wife is a naturalized citizen.
Husband dies leaving everything to his wife outright. How much of a marital
deduction will his estate have?
A. 100%
B. 0% because the property must be in qualified domestic trust.
C. 0% because non-U.S. not entitled to marital deductions.
D. 0% because the property must be in a qualified terminable interest property
(QTIP) trust. - (ANSWER)A. 100%
H has a $17,000,000 estate. He has children by his first wife. His second wife has
two children by a previous marriage. H wants to provide exclusively for W2 during
her life, pay no federal estate taxes at his death, minimize federal estate taxes at
W2's death, and ensure that when W2 dies, his estate will go to his children, not
hers. You suggest H ask his lawyer about establishing a credit shelter bypass trust
to be funded with the full exemption equivalent amount, with W2 as income
beneficiary and his children as remainder beneficiaries. He could then put the
balance of his estate in a trust that would qualify for the marital deduction and
pass to his children at W2's death. To accomplish this, you should recommend
a(n):
A. Grantor Retained Income Trust (GRIT).
B. estate trust.
C. Qualified Terminable Interest Property (QTIP) trust.
D. testamentary general power of appointment marital trust. - (ANSWER)C.
Qualified Terminable Interest Property (QTIP) trust.
COMPLETE QUESTIONS With 100% Verified Solutions,
H's will creates a QTIP marital trust for the benefit of W. The trust provides that
W will receive all of the trust income, and will receive trust principal for her health
and support. W has a limited power of appointment over the trust. Bank X is
designated to serve as the sole trustee. At W's death, any income or principal she
received from the trust will be included in her gross estate. H's executor will make
a QTIP election for this trust on H's federal estate tax return. The marital trust:
A. will be included in W's gross estate at her death because W had a limited
power of appointment over the trust.
B. will be included in W's gross estate at her death because she was entitled to
receive distributions from trust principal for her health and support.
C. will not be included in W's gross estate at her death because a QTIP election
was made.
D. will be included in W's estate because a QTIP election was made. -
(ANSWER)D. will be included in W's estate because a QTIP election was made.
Which of the following is NOT a requirement of a QTIP trust?
A. All net accounting income to be paid to the surviving spouse at least annually.
B. Principal to be distributed at the trustee's discretion for the surviving spouse's
health, education, support, or maintenance.
C. The surviving spouse has the ability to require the trustee to convert non-
income producing assets to income productive assets.
,D. The surviving spouse may be the only permissible distributee during their
lifetime. - (ANSWER)B. Principal to be distributed at the trustee's discretion for
the surviving spouse's health, education, support, or maintenance.
In a pro rata fractional formula, which trust is frozen during administration prior
to funding?
A. The marital trust
B. The residual trust
C. Neither, they must share the appreciation/depreciation.
D. Both the marital and residual trusts. - (ANSWER)C. Neither, they must share
the appreciation/depreciation.
Which of the following is MANDATORY to qualify the general power of
appointment (GPA) marital deduction trust?
A. Right to encroach upon corpus of the marital deduction share by surviving
spouse during lifetime.
B. Ultimate distribution to decedent's heirs.
C. All net accounting income paid at least annually to the surviving spouse and
surviving spouse is given either lifetime GPA or testamentary GPA.
D. Surviving spouse has the right to make gifts from the marital deduction share
during lifetime. - (ANSWER)C. All net accounting income paid at least annually to
the surviving spouse and surviving spouse is given either lifetime GPA or
,testamentary GPA.
Which of the following is NOT a characteristic of a qualified domestic trust (QDT)?
A. At least one trustee must be a U.S. citizen or domestic corporation.
B. The executor of the donor's estate must irrevocably elect to have the trust
treated at a QDT.
C. The U.S. trustee must have the right to withhold federal estate taxes from any
principal distribution.
D. Upon termination of the trust, the U.S. trustee must file a final accounting with
the IRS and a tax at the maximum estate tax rate of the current fair market value
of the trust assets shall be assessed. - (ANSWER)D. Upon termination of the trust,
the U.S. trustee must file a final accounting with the IRS and a tax at the
maximum estate tax rate of the current fair market value of the trust assets shall
be assessed.
The duration of a life estate is BEST described as which of the following?
A. A fixed term
B. A life or the lives of one or more persons
C. Potentially infinite
D. Not to exceed 99 years - (ANSWER)B. A life or the lives of one or more persons
, Husband is not a U.S. citizen but is a resident alien. Wife is a naturalized citizen.
Husband dies leaving everything to his wife outright. How much of a marital
deduction will his estate have?
A. 100%
B. 0% because the property must be in qualified domestic trust.
C. 0% because non-U.S. not entitled to marital deductions.
D. 0% because the property must be in a qualified terminable interest property
(QTIP) trust. - (ANSWER)A. 100%
H has a $17,000,000 estate. He has children by his first wife. His second wife has
two children by a previous marriage. H wants to provide exclusively for W2 during
her life, pay no federal estate taxes at his death, minimize federal estate taxes at
W2's death, and ensure that when W2 dies, his estate will go to his children, not
hers. You suggest H ask his lawyer about establishing a credit shelter bypass trust
to be funded with the full exemption equivalent amount, with W2 as income
beneficiary and his children as remainder beneficiaries. He could then put the
balance of his estate in a trust that would qualify for the marital deduction and
pass to his children at W2's death. To accomplish this, you should recommend
a(n):
A. Grantor Retained Income Trust (GRIT).
B. estate trust.
C. Qualified Terminable Interest Property (QTIP) trust.
D. testamentary general power of appointment marital trust. - (ANSWER)C.
Qualified Terminable Interest Property (QTIP) trust.
