Estate Planning Considerations - Review Questions Flashcards
What are the possible tax implications for a son who received an inheritance from his father and disclaimed it, so that it then passed on to his mother, the decedent’s spouse?
By disclaiming his share and permitting his mother to take it instead, he may have qualified his dad’s estate for a marital deduction due to the transfer of the assets to the surviving spouse.
What are the possible tax implications for a daughter who received an inheritance from her father and disclaimed it, so that it then passed on to a charity?
If she disclaims the property in favor of the charity, her father’s estate may receive a charitable deduction.
Property Interests - JTWROS with spouses
Half value of the property is included in a JT’s estate regardless of contribution
Property Interests - JTWROS with spouses & non-spouses
Income is split equally among all tenants owning property held as JTWROS
Property Interests - JTWROS with non-spouses
FMV of the property is included in a JT’s estate adjusted for contribution
How much life insurance is included in the gross estate for
Owner/Insured
Death Benefit is included.
How much life insurance is included in the gross estate for
Owner not the insured
The replacement cost is included.
How much life insurance is included in the gross estate for
Insured with incidents of ownership
Death Benefit is included.
How much life insurance is included in the gross estate for
New policy purchased by an irrevocable trust
Nothing is included.
How much life insurance is included in the gross estate for
Owner transferred policy to trust within 3 years of death
Death Benefit is included.
Mary creates an irrevocable trust. The terms of the trust allow for an income stream to Mary. At termination, the trust assets distribute to Mary’s three children. This is most likely what type of trust?
1) A CRAT
2) Revocable Trust
3) A GRAT
4) A QTIP Trust
3) A GRAT
Which of the following is true regarding disclaimers?
1) A disclaimer can only be used by a surviving spouse.
2) A disclaimer must be elected within 12 months after the day on which the transfer creating the interest is
made for beneficiaries over 21.
3) The disclaimer may be made verbally.
4) The refusal to accept an interest in the property must be irrevocable.
4) The refusal to accept an interest in the property must be irrevocable.
Which of the following is not a qualification for a disclaimer?
1) Must be in writing
2) Must be revocable
3) Refusal must be received no later than nine months, or nine months after the beneficiary turns 21.
4) Must disclaim prior to accepting any benefits or interest
2) Must be revocable
Kathryn is 90 years old. Kathryn has a checking account on her individual name. She keeps around $50,000 in that account at all times. Her intention is for her daughter, Sally, to receive those funds at her death and have immediate access to the cash for any unexpected expenses. What type of account would you suggest Kathryn set up for the checking account?
1) Transfer on Death
2) Irrevocable Trust with a Corporate Trustee
3) Pay on Death
4) None of the above
3) Pay on Death
Which of the following is correct in regards to simple and complex trusts?
1) Complex trusts are required to pay out all income
2) Simple trusts can only distribute corpus to charities.
3) Complex trusts are responsible for paying the income tax on distributions to the beneficiaries.
4) Simple trusts have a personal exemption of $300 as a separate entity
4) Simple trusts have a personal exemption of $300 as a separate entity
