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Estate Planning > Trusts > Flashcards

Trusts Flashcards

1
Q

When does a revocable trust become irrevocable?

A

When the Settlor dies

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2
Q

When does a revocable living trust commence?

A

When the trust has been executed and funded, or named as the recipient of property by a will.

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3
Q

Can assets not transferred into the trust be transferred after the death of a settlor?

A

Yes.

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4
Q

Who is the legal owner of trust assets?

A

The trustee.

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5
Q

When does a trust have to file taxes?

A

When it becomes irrevocable AND no settlor is acting as a trustee.

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6
Q

How does an irrevocable trust file taxes?

A

The trustee must apply for an employer identification number.

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7
Q

What is the federal marital deduction for?

A

To allow spouses to leave unlimited assets to one another tax-free.

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8
Q

How much taxes are due on the assets held in the Marital Trust?

A

None.

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9
Q

What goes into the Marital Trust?

A

All assets above and beyond the estate tax exemption.

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10
Q

What are the other names for a Family Trust?

A

B Trust
Bypass Trust
Credit Trust

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11
Q

How much goes into the Family Trust?

A

Up to the federal estate tax exemption.

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12
Q

Do the assests in the Family Trust count towards the survivor’s assets when she dies?

A

No.

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13
Q

Can the surviving spouse use the assets in the Family Trust during her lifetime?

A

Yes.

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14
Q

How does creating AB (Family and Marital) trusts save on federal taxes?

A

By protecting assets in the Family Trust with the exemption and the assets in the Marital Trust with the marital deduction. So no taxes will be due on the Deceased Spouse’s estate.

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15
Q

If the Surviving Spouse dies with more than the exemption allowed, will she be taxed?

A

Yes.

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16
Q

Should I give my children real estate and stocks during my lifetime or after I die?

A

For any property that can appreciate over time, keeping the assets until death is more beneficial to the heirs because they can receive a step-up in basis which will reduce capital gains taxes upon sale.

17
Q

When should you value the decedent’s share of trust assets and allocate to subtrusts?

A

Six months after the death of the decedent.

18
Q

Can you allocate whole assets rather than undivided interests, such as a home and its contents?

A

Yes.

19
Q

Can you revoke the Survivor’s trust after the death of the first settlor?

A

Yes.

20
Q

How is the actual allocation of trust assets accomplished?

A

By book entry in the accounting records of the trust.

21
Q

Do you have to register title in the name of a subtrust, such as Survivor’s Trust or Family Trust?

A

No.

22
Q

If there’s only one stock certificate for 100 shares, can you allocate 40% to one subtrust and 60% to another?

A

Yes, so long as accurate accounting records are kept.

23
Q

What date do you use to establish subtrusts?

A

The date of death of the first spouse or the surviving spouse. Essentially, whenever an event occurs that causes the termination of an existing trust and establishment of a new trust.

24
Q

Can you charge death taxes, funeral expenses and expenses of last illness chargeable to the survivor’s property?

A

No, only to the decedent’s.

25
Q

What kind of a trust must obtain it’s own taxpayer number, file taxes, and makes estimated payments?

A

Irrevocable trusts

26
Q

If the surviving settlor is not acting as trustee of the Survivor’s Trust, must the ST file a tax return?

A

Yes.

27
Q

When must a Survivor’s Trust file a tax return?

A

If the surviving settlor is not acting as trustee.

28
Q

Must joint trustees act unanimously?

A

Yes.

29
Q

Can a trustee delegate the decision to distribute trust assets or not?

A

No.

30
Q

How often does a trustee have to provide an accounting to the beneficiaries?

A

At least once a year.

31
Q

What does a “carrying value” mean in a trust accounting?

A

The income tax basis of a trust asset.

32
Q

Is a successor trustee personally liable for failure to file taxes?

A

Yes.

33
Q

How much do corporate trustees charge in CA?

A

1% of the trust principal balance each year.

Estate Planning (1 decks)

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