Cannon CTFA Prep questions with |\ |\ |\ |\ |\
answers
Jean and John Simmons are married and own their own home as
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tenants by entirety. When John dies the home is valued at
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$350,000. How much will be counted in his gross taxable estate?
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
A. None, as it passes directly to his spouse, Jean.
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B. $175,000 - or one-half of the value
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C. $225,000 - or the full amount minus the $125,000 one-time
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
exclusion for capital gains on a person residence. |\ |\ |\ |\ |\ |\ |\
D. $350,000 - the full amount is includable. - CORRECT ANSWERS
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✔✔B. $175,000 - or one-half the value
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Once a will is properly drafted it is valid:
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A. in all states.
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B. for the state for which it was prepared.
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C. in all states for a period of 5 years.
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D. for the state for which it was prepared for a period of 5 years.
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- CORRECT ANSWERS ✔✔B. for the state for which it was
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prepared.
In managing personal trust assets, a trustee should seek which of
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
the following?
|\ |\
,A. maximum income
|\ |\
B. preservation of capital
|\ |\ |\
C. reasonable income and preservation of capital, including
|\ |\ |\ |\ |\ |\ |\ |\
purchasing power |\
D. maximum income and reasonable preservation of capital -
|\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT ANSWERS ✔✔C. reasonable income and preservation of
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capital including purchasing power
|\ |\ |\ |\
A decedent's estate being settled by your bank contains an
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
antique automobile. One of the directors of your bank indicates
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
that he would like to buy it. You should do which of the following?
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
A. Sell it to him at a bargain price and befriend him.
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
B. Have a qualified appraisal done and offer it to him at that
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
value.
C. Explain that he may not purchase the car from the estate.
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D. Arrange for a public auction at which he may buy it if he is the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
highest bidder. - CORRECT ANSWERS ✔✔C. Explain that he may
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
not purchase the car from the estate.
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If you hold a rental property in an irrevocable trust, when is it all
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right to rent to an employee of your trust department?
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A. Never |\
B. When the employee pays fair rent.
|\ |\ |\ |\ |\ |\
,C. When the employee has been with you at least 5 years and
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can be trusted.|\ |\
D. When the employee has no connection with the account or
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beneficiaries. - CORRECT ANSWERS ✔✔A. Never |\ |\ |\ |\ |\
Which of the following generally may NOT hold real property?
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A. Revocable Living Trusts trusteed by a corporate fiduciary.
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B. Uniform Gift to Minors Account
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C. 2503(c) Minors Trust
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D. Uniform Transfer to Minors Account - CORRECT ANSWERS
|\ |\ |\ |\ |\ |\ |\ |\ |\
✔✔B. Uniform Gifts to Minors Account
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H's will provides that upon his death, $1 million will be held in a
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trust for the benefit of his wife, W. This trust provides that W will
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receive all of the trust income and will receive distributions of
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principal int he form of an annuity for her lifetime. At W's death,
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the remaining trust assets will be distributed to a designated
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charity. H's executor intends to make a "QTIP" election for this
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trust. Will the legacy to the trust, or any part thereof, be
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deductible by H's estate, or if so, why? |\ |\ |\ |\ |\ |\ |\
A. Yes, the entire $1 million will qualify for the estate tax marital
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and charitable deductions.
|\ |\
B. No, none of the $1 million will qualify for the estate tax marital
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
and charitable deductions.
|\ |\ |\
C. Yes, the entire $1 million will qualify for the estate tax marital
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
deduction.
, D. Yes, the value of W's income interest will qualify for the
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marital deduction; the remainder will not qualify for any
|\ |\ |\ |\ |\ |\ |\ |\ |\
deduction. - CORRECT ANSWERS ✔✔C. Yes, the entire $1 million |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
will qualify for the estate tax marital deduction.
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H makes a gift of property to a trust for the benefit of his
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
children. If H serves as a trustee, what limitations, if any, should
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
be placed on his distribution powers in order to avoid adverse gift
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
and estate tax consequences?
|\ |\ |\ |\
A. H's power to make distributions should be limited by
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
ascertainable standards such as health, support and education. |\ |\ |\ |\ |\ |\ |\
B. No limitations are required.
|\ |\ |\ |\ |\
C. H should be prohibited from participating in making any
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
distributions.
D. H's power to make distributions should be limited to those
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
required to discharge his legal obligation to support his children. -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT ANSWERS ✔✔A. H's power to make distributions
|\ |\ |\ |\ |\ |\ |\ |\ |\
should be limited by ascertainable standards such as health,
|\ |\ |\ |\ |\ |\ |\ |\ |\
support and education. |\ |\
Which of the following statements about a QTIP trust is false?
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
A. An executor has the ability to elect, partially elect, or not elect
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
to qualify for QTIP treatment any part of the marital trust
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
property.
B. The spouse-beneficiary need not have the ability to control the
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ultimate disposition of the trust property.
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answers
Jean and John Simmons are married and own their own home as
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
tenants by entirety. When John dies the home is valued at
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
$350,000. How much will be counted in his gross taxable estate?
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
A. None, as it passes directly to his spouse, Jean.
|\ |\ |\ |\ |\ |\ |\ |\ |\
B. $175,000 - or one-half of the value
|\ |\ |\ |\ |\ |\ |\
C. $225,000 - or the full amount minus the $125,000 one-time
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
exclusion for capital gains on a person residence. |\ |\ |\ |\ |\ |\ |\
D. $350,000 - the full amount is includable. - CORRECT ANSWERS
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
✔✔B. $175,000 - or one-half the value
|\ |\ |\ |\ |\ |\ |\
Once a will is properly drafted it is valid:
|\ |\ |\ |\ |\ |\ |\ |\
A. in all states.
|\ |\ |\
B. for the state for which it was prepared.
|\ |\ |\ |\ |\ |\ |\ |\
C. in all states for a period of 5 years.
|\ |\ |\ |\ |\ |\ |\ |\ |\
D. for the state for which it was prepared for a period of 5 years.
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
- CORRECT ANSWERS ✔✔B. for the state for which it was
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
prepared.
In managing personal trust assets, a trustee should seek which of
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
the following?
|\ |\
,A. maximum income
|\ |\
B. preservation of capital
|\ |\ |\
C. reasonable income and preservation of capital, including
|\ |\ |\ |\ |\ |\ |\ |\
purchasing power |\
D. maximum income and reasonable preservation of capital -
|\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT ANSWERS ✔✔C. reasonable income and preservation of
|\ |\ |\ |\ |\ |\ |\
capital including purchasing power
|\ |\ |\ |\
A decedent's estate being settled by your bank contains an
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
antique automobile. One of the directors of your bank indicates
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
that he would like to buy it. You should do which of the following?
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
A. Sell it to him at a bargain price and befriend him.
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
B. Have a qualified appraisal done and offer it to him at that
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
value.
C. Explain that he may not purchase the car from the estate.
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
D. Arrange for a public auction at which he may buy it if he is the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
highest bidder. - CORRECT ANSWERS ✔✔C. Explain that he may
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
not purchase the car from the estate.
|\ |\ |\ |\ |\ |\
If you hold a rental property in an irrevocable trust, when is it all
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
right to rent to an employee of your trust department?
|\ |\ |\ |\ |\ |\ |\ |\ |\
A. Never |\
B. When the employee pays fair rent.
|\ |\ |\ |\ |\ |\
,C. When the employee has been with you at least 5 years and
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
can be trusted.|\ |\
D. When the employee has no connection with the account or
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
beneficiaries. - CORRECT ANSWERS ✔✔A. Never |\ |\ |\ |\ |\
Which of the following generally may NOT hold real property?
|\ |\ |\ |\ |\ |\ |\ |\ |\
A. Revocable Living Trusts trusteed by a corporate fiduciary.
|\ |\ |\ |\ |\ |\ |\ |\
B. Uniform Gift to Minors Account
|\ |\ |\ |\ |\
C. 2503(c) Minors Trust
|\ |\ |\
D. Uniform Transfer to Minors Account - CORRECT ANSWERS
|\ |\ |\ |\ |\ |\ |\ |\ |\
✔✔B. Uniform Gifts to Minors Account
|\ |\ |\ |\ |\
H's will provides that upon his death, $1 million will be held in a
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
trust for the benefit of his wife, W. This trust provides that W will
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
receive all of the trust income and will receive distributions of
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
principal int he form of an annuity for her lifetime. At W's death,
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
the remaining trust assets will be distributed to a designated
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
charity. H's executor intends to make a "QTIP" election for this
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
trust. Will the legacy to the trust, or any part thereof, be
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
deductible by H's estate, or if so, why? |\ |\ |\ |\ |\ |\ |\
A. Yes, the entire $1 million will qualify for the estate tax marital
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
and charitable deductions.
|\ |\
B. No, none of the $1 million will qualify for the estate tax marital
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
and charitable deductions.
|\ |\ |\
C. Yes, the entire $1 million will qualify for the estate tax marital
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
deduction.
, D. Yes, the value of W's income interest will qualify for the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
marital deduction; the remainder will not qualify for any
|\ |\ |\ |\ |\ |\ |\ |\ |\
deduction. - CORRECT ANSWERS ✔✔C. Yes, the entire $1 million |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
will qualify for the estate tax marital deduction.
|\ |\ |\ |\ |\ |\ |\
H makes a gift of property to a trust for the benefit of his
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
children. If H serves as a trustee, what limitations, if any, should
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
be placed on his distribution powers in order to avoid adverse gift
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
and estate tax consequences?
|\ |\ |\ |\
A. H's power to make distributions should be limited by
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
ascertainable standards such as health, support and education. |\ |\ |\ |\ |\ |\ |\
B. No limitations are required.
|\ |\ |\ |\ |\
C. H should be prohibited from participating in making any
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
distributions.
D. H's power to make distributions should be limited to those
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
required to discharge his legal obligation to support his children. -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT ANSWERS ✔✔A. H's power to make distributions
|\ |\ |\ |\ |\ |\ |\ |\ |\
should be limited by ascertainable standards such as health,
|\ |\ |\ |\ |\ |\ |\ |\ |\
support and education. |\ |\
Which of the following statements about a QTIP trust is false?
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
A. An executor has the ability to elect, partially elect, or not elect
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
to qualify for QTIP treatment any part of the marital trust
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
property.
B. The spouse-beneficiary need not have the ability to control the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
ultimate disposition of the trust property.
|\ |\ |\ |\ |\ |\
