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CFP Exam Study > Estate > Flashcards

Estate Flashcards

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1
Q

Two trusts that could include HEMS provision?

A

QTIP(c) and Disclaimer

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2
Q

Bypass trust quality for Marital Deduction?

A

No, uses exemption

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3
Q

Does terminal interest in house left to spouse qualify for marital deduction?

A

Yes

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4
Q

JTWROS subject to probate?

A

No, but is for Estate

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5
Q

Amount of owned life insurance policy included in probate /Estate? (On another’s life)

A

Interpolated terminal reserve

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6
Q

Debt, funeral and administrative expenses, and charitable deduction subtracted for gross estate?

A

No, subtracted for Adjusted Gross Estate

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7
Q

Gifts of future interest ( irrevocable trust) allowed annual exclusions?

A

No, unless there are Crummey provisions or is 2503(c) trust

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8
Q

Is GSST due at time of gift?

A

No, can be due later to due indirect skips

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9
Q

Step up basis for stock at time of death when buy/sell used?

A

Yes

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10
Q

When is life insurance trust needed?

A

When there is possible estate tax exposure

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11
Q

Non-Community Property (4)

A

Income earned prior to marriage
Property received as gift by one spouse
Property inherited by one spouse
Interest earned on separate assets by one spoise

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12
Q

JTWROS facts (5)

A

Can be held by husband/wife, parent/child, siblings, business partners
Control, ownership, and enjoyment shared equally
Upon death, property immediately passes to surviving joint tenants equally
Property Not controlled by terms of will
Not subject to probate

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13
Q

Tenancy by the Entirety facts (3)

A

Ownership by husband and wife only
Transfer of property only with mutual consent
Property protected from creditors of one spouse but not both

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14
Q

Tenancy in Common facts (4)

A

Two or more owners with undivided interest
Income distributed according to each owner’s %
Owners can transfer their share
Ownership stake subject to probate

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15
Q

Assets Not subject to Probate (6)

A

Property held by deeds of title (IRA)
JTWROS
Govt Bonds- co-ownership
Revocable Living Trusts
Payable on Death accounts
Totten Trust

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16
Q

Assets Subject to Probate (4)

A

Single owner assets
Tenancy in Common
Estate is beneficiary
Community Property

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17
Q

Assets in Gross Estate (8)

A

Single owned assets
Tenancy in common
Estate is beneficiary
Community Property
JTWROS/ Tenants in Entirety
Life Insurance
General Powers
3 years gift taxes paid

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18
Q

Life Insurance added to Estate (3)

A

Proceeds paid to executor
Decedent posses incident of ownership
Transferred policy within 3 years

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19
Q

Value of Gift- tax purpose

A

FMV on date of gift

20
Q

Basis of Gift

A

If FMV greater than donor basis, use donor’s adjusted basis
If FMV less than donor’s adjusted basis then:
If sale price above basis, there is gain
If sale price below FMV there is loss
If sale price between FMV and Basis no gain or loss

21
Q

Deductible/ not taxable Gifts (5)

A

Gifts to spouse
Gifts to qualified charities
Payments made directly to educational institution
Payments made directly to medical care provider
Gifts to American political parties

22
Q

Gifts rules for Estate tax purposes (4)

A

Gifts are taxable that exceed annual exclusion
Taxable gifts added to taxable estate
Gift taxes paid are credit against tentative tax
Gift taxes paid within 3 years of death added to gross estate

23
Q

Power of Attorney (3)

A

Traditional, non-durable- authority ceases with principal not competent
Durable- authority continues with principal incompetent
Springing- no authority until incompetency

24
Q

Powers of Appointment for Trusts (3)

A

Special Power- with consent of creator or person having substantial adverse interest
Ascertainable Standard- (HEMS) Relating to health, education, maintenance, or support
General Power- holder may exercise authority however they wish

25
Q

General Power- Gift Tax Implications (2)

A

Exercised, released, or lapsed- taxed
Lapses with 5 or 5 power- not taxed

26
Q

General Power- Estate Tax Implications (2)

A

Exercised, released, or lapsed- taxed
Exercised, released, or lapsed with 5 or 5- greater of 5 or 5 is taxed

27
Q

5 or 5 Power- Estate or Gift tax implication

A

Property subject to general power is included in donee decedent’s estate (or considered taxable gift) only in amount over:

Greater of $5,000 or 5% of total value of subject property

28
Q

Tainted Grantor Trust (2)

A

Grantor retains:
A right to income or to use enjoy trust property
A reversionary interest exceeding 5%

29
Q

Trust Ownership (2)

A

Trustee holds legal title to property
Beneficiary has equitable title to property

30
Q

Simple Trusts (3)

A

Conduit or pass through of income:

2503b
Marital
QTIP

31
Q

Crummey Trust facts (2)

A

Irrevocable trust with demand rights (given to minor through guardian)
Beneficiary has right to demand withdrawal that is the lesser or the amount of annual gift exclusion or the value of the transferred gift

32
Q

Nonmarital B Trust (Bypass) facts (3)

A

Property transferred at death
Can be structured to provide income stream
Decedent has postmortem control

33
Q

QTIP C Trust (current income) facts (4)

A

Provides surviving spouse with stream of income
Property qualifies for marital deduction
Mainly used for second marriages
Decedent has postmortem control

34
Q

Qualified Domestic Trust (QDT/QDOT) facts (3)

A

No unlimited marital deduction
No estate tax due
$100k gift between spouses

35
Q

Present Interest Gift vehicles (3)

A

UGMA/UTMA
2503C trust (2503b is future interest)
Section 529 college savings plan

36
Q

5% income to donor trusts

A

CRAT/CRUT

37
Q

No 5% income to charity trusts

A

CLAT/CLUT

38
Q

Intrafamily Transfers with income to Property Owner (PIGS)

A

Private Annuity
Installment Sale
GRAT/GRUT
Self Canceling Note

39
Q

Intrafamily Transfers with property/ income to family

A

Partnership/ S Corp
Family Limited Partnership
Gift Leaseback
Qualified Personal Residence Trust

40
Q

Disclaimer requirements (2)

A

In writing within 9 months
Accepted no interest

41
Q

Postmortem Planning- Estate Liquidity (2)

A

Stock Redemption (section 303)
Installment payment of estate taxes (section 6166)

42
Q

Stock Redemption (section 303) requirements (3)

A

Must be closely held and incorporated
Value of business must exceed 35% of gross estate
Redemption cannot exceed estate taxes plus admin expenses

43
Q

Installment payment of estate taxes (section 6166) requirements (2)

A

Value of business must exceed 35% of adjusted gross estate
4 years interest only- total 14 year repayment

44
Q

Postmortem Planning - Estate tax reduction- Special Use

A

Special Use Valuation (section 2032A)
25% of gross estate consists of real property
Must be in qualified use 5 out of 8 years before and 10 years after death

45
Q

Special Powers of appointment subject to estate/gift tax?

A

No

CFP Exam Study (6 decks)

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