CFP - Estate Planning Exam Questions with Correct Answers Latest 2025-2026
Which of the following are deducted from a decedent's gross estate:
A whole life policy that he owned on his mother.
A mortgage on community property.
A credit card balance on a sole & separate account.
Income taxes paid earlier in the year.
Interest owed on the credit card balance.
I, II, III, IV and V.
I, III, IV and V only.
I, II, IV and V only.
III and V only. - Answers look for debts and obligations as those are deducted from a gross
estate.
Debts and obligations of the decedent are deductible from the gross estate. Only 1/2 the
mortgage on community property is deductible.
Of the following statements, which is false?
The unlimited marital deduction merely postpones the potential estate tax due.
Property that is not included in the decedent's gross estate cannot qualify for the unlimited
marital deduction.
The death benefit of a life insurance policy included in a decedent's gross estate is not eligible
for the unlimited marital deduction.
An individual can use the unlimited marital deduction during life to fund the surviving spouse's
applicable estate tax credit. The best property to transfer is the property that is expected to
appreciate in value. - Answers Answer "C" is a false statement. If the death benefit of a life
insurance policy is included in a decedent's gross estate, the value of the death benefit will be
eligible for the unlimited marital deduction. All of the other answers are true statements.
Mary's husband died two years ago. His will included the following three testamentary trusts: A
,trust for the benefit of Mary's children, but giving Mary a general power of appointment over the
trust assets for the remainder of her life (GPOA Trust), a bypass trust for the benefit of Mary's
children, but giving Mary a power to invade the trust assets for an ascertainable standard for the
remainder of her life (Bypass Trust), and a charitable remainder annuity trust for the benefit of
Mary's as the income beneficiary for life with the remainder to her alma mater (Charitable Trust).
At Mary's death, which of the trusts assets will be included in her gross estate?
GPOA Trust.
Bypass Trust.
Charitable Trust. - Answers The GPOA Trust would be included in Mary's gross estate. Because
the withdrawal right of the Bypass trust was limited to an ascertainable standard, its assets are
not included in Mary's gross estate. Mary has an interest in the assets of the Charitable trust so
those assets are also included in her gross estate then she gets an unlimited charitable
deduction equal to the assets included in the gross estate.
In calculating the estate tax liability, which of the following statements are true:
Casualty and theft losses are subtracted from the gross estate.
The marital deduction is a credit against the taxable estate.
Adjustable taxable gifts are added back to the taxable estate to determine the tentative tax base.
The tentative tax is reduced by the unified credit. - Answers The marital deduction is not a credit,
but is a deduction against the adjusted gross estate in calculating the taxable estate. TCJA
repealed Casualty and Theft losses for Dec 31, 2017 - Jan 1 2026.
Dave died owning a whole life insurance policy on Sherri who is age 40. Dave had been regularly
paying the premiums right up until his death. The face value of the policy is $1,000,000, the cash
value is $429,000, and the surrender value is $400,000. What is the dollar amount of value to
include in Dave's gross estate?
$400,000.
$429,000.
The value of the interpolated terminal reserves plus any unexpired premium.
The replacement value specific to the characteristics of the policy and the health of Sherri. -
,Answers Because the policy is in pay status, the interpolated terminal received plus unexpired
premiums.
Which of the following statements is/are correct?
The value of a CRAT where the decedent was the only non-charitable beneficiary is included in
the gross estate of the decedent.
Gift taxes paid two years prior to the death of the decedent for gifts made four years ago are
included in the gross estate of the decedent under the gross up rule. - Answers The value of the
CRAT is included in the gross estate and then deducted from the adjusted gross estate as a
charitable deduction. Only gift taxes paid on gifts made within three years are included under
the gross up rule.
Jack is a dentist who never married. Three years before his death, he made the following gift: A
$300,000 (death benefit) life insurance policy on his life to Molly. (The policy was worth $5,000
at the time of transfer). - The only gifts he made this year was: Stock worth $40,000 was given
to Mickey. At Jack's death, the stock had increased in value to $70,000 and the life insurance
company paid $300,000 to Molly. What amount will be added back to determine the estate tax
base? - Answers The question is asking about what is added back to get to the ESTATE TAX
BASE, not what is included in the gross estate. A very important factor in correctly answering
this question. Adjusted taxable gifts are added back to the taxable estate in determining the
estate tax base at the date-of-gift value ($40,000) minus the annual gift tax exclusion ($15,000)
to arrive at $25,000. The gift to Molly is included as a gift of the $5,000 transfer value, but
application of the annual gift exclusion fully offsets the gift.
Which of the following is correct about the unlimited tax marital deduction?
The unlimited marital deduction applies to property included in the decedent's gross estate.
A noncitizen surviving spouse has a limited marital deduction.
The marital deduction is never available to a surviving spouse who is not a U.S. citizen.
The deduction for the unlimited marital deduction is always equal to the property that qualifies
for the unlimited marital deduction. - Answers Citizenship affects the application of the marital
deduction; a non-U.S. citizen must receive distributions through a QDOT to utilize the marital
deduction. The deduction is not always equal to the qualified property. It is commonly equal to
the qualifying property less any expenses paid by the surviving spouse.
Diana's will leaves all of her property to her husband, George. If he does not survive her by more
than 240 days, the property will transfer to Diana's only daughter. Diana dies on May 1 and
, George dies on the following February 1. Of the following statements, which is true?
Diana's property will transfer to her daughter and the property will be eligible for the unlimited
marital deduction in Diana's estate.
Diana's property will transfer to her daughter and the property will not be eligible for the
unlimited marital deduction in Diana's estate.
Diana's property will transfer to George and the property will be eligible for the unlimited marital
deduction in Diana's estate.
Diana's property will transfer to George and the property will not be eligible for the unlimited
marital deduction in Diana's estate. - Answers Diana's property will transfer to George because
he survived her for at least eight months. Therefore, both answer "A" and answer "B" are
incorrect. Answer "C" is incorrect because the property that transfers to George will not be
eligible for the unlimited marital deduction in Diana's estate because the survivorship clause
exceeds 6 months.
Sam, age 95, transferred common stock with a fair market value of $600,000 to an irrevocable
trust. The trust provides that the income from the trust is payable to Sam for life, and upon his
death, the trust corpus passes to his sister. The trust prohibits Sam from changing the trust
beneficiaries. If Sam dies one year from now when the value of the trust assets is $700,000,
how much of the trust will be included in Sam's gross estate? - Answers The explanation is
contained with the problem itself in that this is a grantor trust. Just because the beneficiary is
irrevocable doesn't change the fact that the donor has a life interest in income in the trust
making it includable in his gross estate.
Rick and Amber (husband and wife), residents of a non-community property state, owned
unimproved land that they have titled in joint tenancy with rights of survivorship. Rick purchased
the land with his own funds for $100,000 five years ago, and he died in the current year when the
land was worth $400,000. What is the amount associated with the land that will be included in
Rick's gross estate? - Answers 50% of the fair market value must be included in Rick's estate
because of the deemed contribution rule because his joint tenant Amber is his spouse. If he
titled JTWROS with anyone but a spouse we would use the "actual contribution rule" in which
case he would have $400,000 included in his gross estate. Note that is he had titled the property
tenants in common, he would have had $400,000 inclusion.
Which of the following accurately describes joint and survivorship life insurance?
The premiums are generally less than if purchasing two individual policies on the same insureds.
Which of the following are deducted from a decedent's gross estate:
A whole life policy that he owned on his mother.
A mortgage on community property.
A credit card balance on a sole & separate account.
Income taxes paid earlier in the year.
Interest owed on the credit card balance.
I, II, III, IV and V.
I, III, IV and V only.
I, II, IV and V only.
III and V only. - Answers look for debts and obligations as those are deducted from a gross
estate.
Debts and obligations of the decedent are deductible from the gross estate. Only 1/2 the
mortgage on community property is deductible.
Of the following statements, which is false?
The unlimited marital deduction merely postpones the potential estate tax due.
Property that is not included in the decedent's gross estate cannot qualify for the unlimited
marital deduction.
The death benefit of a life insurance policy included in a decedent's gross estate is not eligible
for the unlimited marital deduction.
An individual can use the unlimited marital deduction during life to fund the surviving spouse's
applicable estate tax credit. The best property to transfer is the property that is expected to
appreciate in value. - Answers Answer "C" is a false statement. If the death benefit of a life
insurance policy is included in a decedent's gross estate, the value of the death benefit will be
eligible for the unlimited marital deduction. All of the other answers are true statements.
Mary's husband died two years ago. His will included the following three testamentary trusts: A
,trust for the benefit of Mary's children, but giving Mary a general power of appointment over the
trust assets for the remainder of her life (GPOA Trust), a bypass trust for the benefit of Mary's
children, but giving Mary a power to invade the trust assets for an ascertainable standard for the
remainder of her life (Bypass Trust), and a charitable remainder annuity trust for the benefit of
Mary's as the income beneficiary for life with the remainder to her alma mater (Charitable Trust).
At Mary's death, which of the trusts assets will be included in her gross estate?
GPOA Trust.
Bypass Trust.
Charitable Trust. - Answers The GPOA Trust would be included in Mary's gross estate. Because
the withdrawal right of the Bypass trust was limited to an ascertainable standard, its assets are
not included in Mary's gross estate. Mary has an interest in the assets of the Charitable trust so
those assets are also included in her gross estate then she gets an unlimited charitable
deduction equal to the assets included in the gross estate.
In calculating the estate tax liability, which of the following statements are true:
Casualty and theft losses are subtracted from the gross estate.
The marital deduction is a credit against the taxable estate.
Adjustable taxable gifts are added back to the taxable estate to determine the tentative tax base.
The tentative tax is reduced by the unified credit. - Answers The marital deduction is not a credit,
but is a deduction against the adjusted gross estate in calculating the taxable estate. TCJA
repealed Casualty and Theft losses for Dec 31, 2017 - Jan 1 2026.
Dave died owning a whole life insurance policy on Sherri who is age 40. Dave had been regularly
paying the premiums right up until his death. The face value of the policy is $1,000,000, the cash
value is $429,000, and the surrender value is $400,000. What is the dollar amount of value to
include in Dave's gross estate?
$400,000.
$429,000.
The value of the interpolated terminal reserves plus any unexpired premium.
The replacement value specific to the characteristics of the policy and the health of Sherri. -
,Answers Because the policy is in pay status, the interpolated terminal received plus unexpired
premiums.
Which of the following statements is/are correct?
The value of a CRAT where the decedent was the only non-charitable beneficiary is included in
the gross estate of the decedent.
Gift taxes paid two years prior to the death of the decedent for gifts made four years ago are
included in the gross estate of the decedent under the gross up rule. - Answers The value of the
CRAT is included in the gross estate and then deducted from the adjusted gross estate as a
charitable deduction. Only gift taxes paid on gifts made within three years are included under
the gross up rule.
Jack is a dentist who never married. Three years before his death, he made the following gift: A
$300,000 (death benefit) life insurance policy on his life to Molly. (The policy was worth $5,000
at the time of transfer). - The only gifts he made this year was: Stock worth $40,000 was given
to Mickey. At Jack's death, the stock had increased in value to $70,000 and the life insurance
company paid $300,000 to Molly. What amount will be added back to determine the estate tax
base? - Answers The question is asking about what is added back to get to the ESTATE TAX
BASE, not what is included in the gross estate. A very important factor in correctly answering
this question. Adjusted taxable gifts are added back to the taxable estate in determining the
estate tax base at the date-of-gift value ($40,000) minus the annual gift tax exclusion ($15,000)
to arrive at $25,000. The gift to Molly is included as a gift of the $5,000 transfer value, but
application of the annual gift exclusion fully offsets the gift.
Which of the following is correct about the unlimited tax marital deduction?
The unlimited marital deduction applies to property included in the decedent's gross estate.
A noncitizen surviving spouse has a limited marital deduction.
The marital deduction is never available to a surviving spouse who is not a U.S. citizen.
The deduction for the unlimited marital deduction is always equal to the property that qualifies
for the unlimited marital deduction. - Answers Citizenship affects the application of the marital
deduction; a non-U.S. citizen must receive distributions through a QDOT to utilize the marital
deduction. The deduction is not always equal to the qualified property. It is commonly equal to
the qualifying property less any expenses paid by the surviving spouse.
Diana's will leaves all of her property to her husband, George. If he does not survive her by more
than 240 days, the property will transfer to Diana's only daughter. Diana dies on May 1 and
, George dies on the following February 1. Of the following statements, which is true?
Diana's property will transfer to her daughter and the property will be eligible for the unlimited
marital deduction in Diana's estate.
Diana's property will transfer to her daughter and the property will not be eligible for the
unlimited marital deduction in Diana's estate.
Diana's property will transfer to George and the property will be eligible for the unlimited marital
deduction in Diana's estate.
Diana's property will transfer to George and the property will not be eligible for the unlimited
marital deduction in Diana's estate. - Answers Diana's property will transfer to George because
he survived her for at least eight months. Therefore, both answer "A" and answer "B" are
incorrect. Answer "C" is incorrect because the property that transfers to George will not be
eligible for the unlimited marital deduction in Diana's estate because the survivorship clause
exceeds 6 months.
Sam, age 95, transferred common stock with a fair market value of $600,000 to an irrevocable
trust. The trust provides that the income from the trust is payable to Sam for life, and upon his
death, the trust corpus passes to his sister. The trust prohibits Sam from changing the trust
beneficiaries. If Sam dies one year from now when the value of the trust assets is $700,000,
how much of the trust will be included in Sam's gross estate? - Answers The explanation is
contained with the problem itself in that this is a grantor trust. Just because the beneficiary is
irrevocable doesn't change the fact that the donor has a life interest in income in the trust
making it includable in his gross estate.
Rick and Amber (husband and wife), residents of a non-community property state, owned
unimproved land that they have titled in joint tenancy with rights of survivorship. Rick purchased
the land with his own funds for $100,000 five years ago, and he died in the current year when the
land was worth $400,000. What is the amount associated with the land that will be included in
Rick's gross estate? - Answers 50% of the fair market value must be included in Rick's estate
because of the deemed contribution rule because his joint tenant Amber is his spouse. If he
titled JTWROS with anyone but a spouse we would use the "actual contribution rule" in which
case he would have $400,000 included in his gross estate. Note that is he had titled the property
tenants in common, he would have had $400,000 inclusion.
Which of the following accurately describes joint and survivorship life insurance?
The premiums are generally less than if purchasing two individual policies on the same insureds.
