American College HS330 Exam Practice Test Instant Access

Question 1

A father wants to accumulate funds for his 12-year-old son's college education. On the advice of his attorney, the father establishes an IRC Section 2503(c) trust and funds it with annual gifts. All the following statements concerning this arrangement are correct EXCEPT:

AThe trust must be irrevocable.

BThe father's annual gift tax exclusion must be reduced by any amount used to pay college tuition costs.

CAny accumulated income and all trust principal must be available for distribution to the son when he attains age 21.

DIn the event of the son's death prior to age 21, trust assets must either be payable to the son's estate or be subject to a general power of appointment held by the son.

Answer : D

Question 2

All the following statements concerning real properly ownership by married couples as joint tenants with right of survivorship are correct EXCEPT:

AThe deceased spouse's interest in the properly qualifies for the marital deduction since it passes outright to the surviving spouse.

BAll benefits of ownership remain available to the surviving spouse without interruption during the administration of the deceased spouse's estate.

CJointly held property between spouses does not pass through the probate estate of the first spouse to die.

DIn common-law states the total value of the properly receives a stepped-up tax basis in the estate of the first spouse to die.

Answer : D

Question 3

All the following statements concerning guardians for minors are correct EXCEPT:

AA guardian named in a deceased parents will is not necessarily binding on the court.

BA guardian has equitable title to the property he administers for the minor.

CA special guardian can be appointed by the court to protect a minor's rights in a legal proceeding.

DA guardian of the person of a minor may not necessarily be the guardian of the minor's property.

Answer : B

Question 4

All the following statements concerning a grantor-retained annuity trust (GRAT) or a grantorretained unitrust (GRUT) are correct EXCEPT:

AAfter the initial transfer to a GRAT, the grantor is prohibited from making additional contributions to the trust.

BFor gift tax purposes a grantor's retained interest in these trusts is valued at zero.

CPost-transfer appreciation of property transferred to these trusts is excluded from the grantor's gross estate.

DA grantor receives an annual payout from a GRUT that is based on the value that the trust grows or contracts to each year.

Answer : B

Question 5

All the following statements concerning an estate for a term of years are correct EXCEPT:

AIt is an interest in property established for a specific duration.

BThe tenant has the right to possess the property during the term of his interest.

CThe tenant may transfer the property at the end of the term of his interest.

DAn interest may extend beyond the lifetime of the grantor.

Answer : C

Question 6

For estate tax purposes which of the following is (are) a form of charitable gifts that may qualify for the charitable deduction?

l. Split gifts

ll. Charitable remainder trusts

Al only

BII only

CBoth l and II

DNeither I nor II

Answer : C

Question 7

Which of the following statements concerning ownership of property held in trust is (are) correct?

l. The legal owner of property held in trust is a trustee.

lI. The equitable owner of property held in trust is a beneficiary.

Al only

BII only

CBoth l and ll

DNeither I nor II

Answer : C

American College HS330 Fundamentals of Estate Planning test Exam Practice Test