Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

2018 CFP > Estate Planning > Flashcards

Estate Planning Flashcards

You may prefer our related Brainscape-certified flashcards:
CFP® flashcards
1
Q

Requirements for a valid will

A

must be 18 years old
be of sound mind
absence of undue influence
absence of fraud

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

General provisions of a will are

A 
introductory clause to identify testator
testator's domicile
revocation of prior wills
ID of executor/successor
payment of debts
payment of taxes
disposition of tangible property
disposition of real estate
specific bequests
residuary clause
appointments and powers clause
testotor's siganture clause
witness clause
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Can a living will assign POA or appoint a surrogate decision maker for health care choices?

A

NO - living will makes those decisions clear in the document, no decision makers or POA appointed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

The order of information gathering for estate planning is

A 
family information
detailed list of assets, ownerships, and liabilities
medical and disability insurance
life insurance , ownership, insured, benes
annuities
wills trust or gifts
powers of appointment
FMV of assest and estimated growth rate
tax returns and mortgage info
POAs
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Present interest in property can be

A

fee simple - complete ownership with all rights
life estate - exclusive rights to the use and enjoyment until death
interest for term - like life estate bu for a defined period of time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Future interest in property can be

A

remainders and reversions - get a present interest after some other term or life interest passes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

A reversion future interest is when a grantor transfers a life estate to another but ______

A

retains a future interest after the life estate expires

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

A remainder future interest is one that exists at the _____ of a prior interest

A

termination

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Does a survivor holding assets tenancy in common receive the other half of the assets at death of the other owner?

A

NO - no rights of survivorship

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

For non-married JTWROS, if they own an unequitable amount of the assets, is a gift incurred?

A

YES, considered that the majority contributor has made a gift to the minority contributor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Creation of a joint bank account does not result in a gift until the noncontributing party _____

A

withdraws money for their own benefit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

If JTWROS owners are non-married, what determines amount of property to be included in the decedents estate?

A

percentage of contribution

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

If JTWROS are married, how much of property is included in decedent’s gross estate?

A

50%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

In a community property state, married people own an ________ in all property

A

equal and undivided interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Exceptions to community property are

A

acquired before marriage
acquired through gift and held separately
acquired by inheritance and held separately
acquired by court award and held separately

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

If you move from a community property to a common property state, does the nature of your property change? And vice versa?

A

NO - must choose to divide upon arrival; same principal if you move the other way

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

If you die testate, do your assets go through probate?

A

YES

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Assets that pass by contract avoid probate and include:

A 
life insurance proceeds with named bene
retirement plans with named bene
annuity with named joint annuitants
POD and TOD
named bene is living at time of death
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Assets that pass by operation of law avoid probate and include

A

JTWROS
Tenants by entirety
Trust property

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Does gift tax apply to incomplete transfers?

A

NO

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

A revocable trust becomes a gift when the grantor releases the _____

A

power of revocation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Transfers that are NOT subject to gift tax

A
  • medical payments and tuition paid directly to the provider
  • property settlements between divorcing spouses
  • interest on gift loans
  • payments made under obligation of support
  • donations to political orgs
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Transfers that are deductible for determining taxable gifts:

A
  • gifts to qualifying charities
  • gifts and transfers b/t spouses
  • exemption for non US spouses
  • gifts of future interest to non citizen spouses are subject to gift tax
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Net gifts are when the donor and donee agree that ____

A

the donee will pay the gift tax

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Does UGMA cover real property gifts to minors?

A

NO

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Does UTMA cover real property gifts to minors?

A

YES - more flexible than UGMA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

A section 2503(b) trust requires that all ____ be distributed (also called a _____ trust)

A

all income be distributed to child/bene; also called a mandatory income trust

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Does the calculated future interest value of a Section 2503(b) trust (mandatory income trust) qualify for the annual exclusion?

A

NO - only the present income interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

A section 2503(c) trust is like a 2503(b), but income distribution is ______, until child is ____

A

discretionary until child is 21 years old

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

A Crummey minor’s trust is like a 2503(b) and 2503(c) trust, but at age 21, income and corpus distributions are not _____

A

mandatory (like in the others)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Holding periods for disposing of gifts received is ____ for gain basis and ____ for loss basis

A

date the DONOR acquired the property for gain, date of the gift for loss

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Property included in the gross estate is:

A

property owned by the decedent or had an interest

  • dower and curtesy interests
  • gift tax on gifts made within three years
  • transfers with a retained life interest
  • transfers taking effect at death
  • revocable transfers
  • anniuties
  • jointly owned property
  • powers of appointment
  • proceeds of life insurance
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Property excluded from a gross estate is a court award for ____ paid to the decedent’s family

A

wrongful death

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Are dower and curtesy interests fully deductible under the marital deductions?

A

YES

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

If you own a straight life annuity, is it included in your gross estate when you die?

A

NO - because it ends at that point

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

If you own a survivorship annuity (one owner), is it included in your gross estate when you die?

A

YES - the cost of a comparable policy, based on the survivor’s life, is included

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

As a general rule, the gross estate will include the ______ of property held jointly with others

A

entire value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

If you transfer a life insurance policy to an irrevocable trust and die within 3 years or doing so, are the proceeds included in your gross estate?

A

YES because less than 3 years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

Assets for an estate are valued at the ____

A

date of death

40
Q

You can only use an alternate valuation date for an estate if the gross estate and estate tax liability would be _____ than if valued at the DOD

A

LESS

41
Q

If you choose an AVD, then wasting assets are still valued at _____

A

DOD

42
Q

Wasting assets in a gross estate include:

A

copyrights, patents, annuitized annuities, installment notes, and cash accounts)

43
Q

The value included in a gross estate from a grantor retained interest trust is the IRS determined value of the amount of _____ needed to yield the annual annuity payment

A

CORPUS

44
Q

Deductions from the gross estate include:

A
  • funeral expenses
  • admin expenses
  • unpaid mortgages
  • claims against estate
  • losses incurred in administering estate
  • charitable contributins
  • transfers to surviving spouse
  • state death taxes
45
Q

Form 706 estate taxes is generally due ____ after the DOD

A

nine months

46
Q

The holding period of property acquired from a decedent is deemed to be _____

A

long term

47
Q

Crummey power is a ____ power of _____ that allows a trust bene to withdraw assets from a trust for a _____

A

lapsing power of appointment that gives power to withdraw for limited amount of time

48
Q

Crummey powers are used to take advantage of the _____ exclusion

A

annual gift exclusion

49
Q

To avoid gift tax on a lapsed power to withdraw, the 5/5 rule with Crummey powers states that the withdrawal amount must be limited to the greater of ____ of the value of the trust or _____

A

5% or $5,000

50
Q

A decedent’s gross estate will include any assets under a _____ of appointment held by a decedent at the time of death (whether exercised or not)

A

general power of appointment

51
Q

To qualify for the marital deduction, the property transferred must be in the decedent’s ______ and must pass to the decedent’s _____

A

in the gross estate and pass to the spouse

52
Q

When a spouse receives a life estate coupled with a POA, does it qualify for the marital deduction?

A

YES

53
Q

A QTIP (qualified terminable interest property trust) allows for a _____ interest to be passed to a surviving spouse and the property to still qualify for the ______

A

terminable interest and still qualifies for marital deduction

54
Q

For a QTIP to be valid, must include:

A
  • income for life to the spouse
  • value of trust assets must be included in gross estate of surviving spouse and valued at their DOD
  • usually not given POA
  • typically the remainderman has been identified
  • called C or Q trust, often used to protect assets in a second marriage from children of the first marriage
55
Q

A POA Trust (or A Trust) allows a _____ interest to be passed to the surviving spouse and the property still qualified for the _____

A

terminable, still qualifies for marital deduction

56
Q

For a POA trust, the requirements are:

A
  • interest payable for life
  • surviving spouse gets POA
  • assets remaining in trust included in gross estate of the surviving spouse
57
Q

A bypass trust (B trust) is useful when you want to leave property to nonspouse heirs who are not

A

mature or sophisticated enough to handle the property

58
Q

Is the unlimited marital deduction allowed for an alien surviving spouse?

A

NO - unless they become a citizen before the form 706 due date

59
Q

When is the marital deduction allowed for a non-US surviving spouse?

A

When assets placed in a QDOT (qualified domestic trust)

60
Q

Overqualification of an estate occurs when the first decedent spouse in effect uses ______ marital deduction at death

A

too much

61
Q

Overqualification of an estate is when the marital deduction reduces the estate below the ______ amount

A

applicable credit amount - wastes the applicable credit amount

62
Q

To avoid overqualification, usually you leave some of the decedent’s assets in their _____ estate

A

taxable

63
Q

Underqualification of an estate is when the decedent uses _____ marital deduction

A

too little

64
Q

A vested remainder trust is one that is ______

A

nonforfeitable

65
Q

A contingent remainder trust is where the interest depends on whether or not a _____ happens

A

certain future event

66
Q

The rules against perpetuities just means that a trust can’t have an _____ life

A

an infinite (in most states)

67
Q

For an irrevocable trust, the interest in the assets is created on the ______

A

date of the trust agreement

68
Q

For a revocable trust, the interest is created on the _____

A

date the trust becomes irrevocable

69
Q

Which type of trust is exempt from the rule of perpetuities?

A

charitable

70
Q

A simple trust requires that all _____ be _____

A

all income be paid out to beneficiaries annually

71
Q

A complex trust is any trust that isn’t ____

A

simple

72
Q

A dynasty trust passes a _____ to grandchildren

A

life insurance policy

73
Q

A Health and Education Exclusion Trust (HEET) is used to fund medical expenses or education for _____ and free of _____

A

grandchildren and skips generation skipping tax

74
Q

Sprinkling (spray) provisions allows a trustee the power to _____ income to the benefit of the benes

A

direct income

75
Q

Exemption for most simple trusts is _____, for complex is ____

A

$300, $100

76
Q

Qualified Personal Residence Trusts (QPRTs) and Personal Residence Trusts (PRTs) are both used to transfer a _____ to a trust but retain the right to live there

A

personal residence

77
Q

Grantor Retained Annuity Trusts (GRATs) and Grantor Retained Unitrusts (GRUTs) allow a grantor to transfer property to a trust but retain ______

A

rights to annual income payments

78
Q

GRATs and GRUTs are useful to transfer _______ property to family members while maintaining an income interest

A

appreciated property

79
Q

A GRAT or GRUT provides transfer tax advantages if (i) the trust property appreciates rapidly, (ii) the grantor ______ the term of the trust, and (iii) the trust property passes to a family member

A

SURVIVES

80
Q

Charitable gift annuities is when a donor makes a ____ transfer of assets to a charity and receives an _____ from the charity in return

A

irrevocable transfer of assets and receives an annuity in return

81
Q

A Pooled Income Fund (PIF) is an irrevocable transfer of assets to a charity in return for an _____ from the charity’s commingled assets

A

income stream

82
Q

A charitable remainder trust (CRT - which splits into CRAT and CRUT) is an irrevocable trust in which the remainder is a _____

A

qualified charity

83
Q

Initial PV of a remainder interest in a CRAT/CRUT must be at least ____ of FMV of the property/asset at the time of granting

A

10%

84
Q

Annuity/unitrust payments must be at least ___ and >= ____ for CRATs/CRUTs

A

at least 5%, >= 50%

85
Q

A charitable lead trust (CLT) is where the income from assets in the trust go to ____ and the remainder interest goes to _____

A

income goes to charity, remainder goes back to noncharitable bene

86
Q

Private foundations are good for people who want to _____ the process, engage their _____, and their charitable inclinations are not met by ______

A

control the process, engage heirs, and their charitable inclinations are not met by other charities

87
Q

An FLP is created to transfer assets to ______ at a reduced ______ and ____

A

transfer assets to the younger gen with reduced gift tax valuation and costs

88
Q

The main differences between a sale leaseback and a gift leaseback are:

A
  • sale leaseback payments are made to the older gen; gift leasebacks no payments
  • most sale leasebacks involve the older gen stopping work
89
Q

A SCIN is a self-cancelling installment note and the value of the notes canceled at death of the seller are _______ in the gross estate

A

NOT INCLUDED

90
Q

For a disability buy-sell, the definition of disability should match the definition for _____

A

insurance

91
Q

The different types of valuation discounts are:

A
  • minority interest
  • lack of marketability
  • blockage discount (block trading)
  • key person discount (key person has died or is disabled)
92
Q

Special use valuation is available to reduce gross estate value if the decedent owned real property that was used as a _____ or in connection with a _____

A

farm or closely held business

93
Q

A skip person for GSTT is anyone who

A
  • related person two generations or more below (grandchild)
  • trust where ALL the benes are two or more generations below
  • unrelated person younger than transferor by 37.5 years
94
Q

Can a grandparent with no children make a transfer to a grandniece/nephew without incurring GSTT?

A

YES

95
Q

There a several instances where life insurance proceeds would be included in gross estate, they are:

A
  • they gifted the policy within 3 years of death
  • retained rights or reversionary rights in policy
  • still had POA
  • had incidents of ownership in policy at DOD
  • proceeds were payable to their estate

2018 CFP (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions