American College HS330 Exam Practice Test Instant Access

Question 1

A wife with substantial property in her own name would like to provide for her husband in the event of her prior death but does not want him to be able to leave her property to a second wife if he remarries. She would also like to take advantage of the marital deduction to save federal estate taxes. Her attorney has advised her that qualified terminable interest property (QTIP) will accomplish her objectives. To qualify such property for the marital deduction, all the following requirements must be met EXCEPT:

AThe surviving spouse must be given a life time right to receive all the property's income at least annually.

BAn irrevocable election must be made by the decedent's executor to have the property includible in the surviving spouse's gross estate.

CThe property must have been included in the decedents gross estate for federal estate tax purposes.

DThe surviving spouse must be given a general power to appoint each year at least $5,000 or 5 percent of the value of the property.

Answer : D

Question 2

Which of the following areas of consideration present common ethical issues for the estate planner?

AContracts

BCompatibility

CConsistency

DCompensation

Answer : D

Question 3

Which of the following statements concerning property is (are) correct?

l. A mortgage on real estate is real property.

ll. A tree growing on land is real property.

Al only

BII only

CBoth l and II

DNeither I nor II

Answer : B

Question 4

Requirements for property to qualify for the federal estate tax marital deduction include which of the following?

l. The property interest must be includible in the decedents gross estate.

lI. The property must pass in such manner that it will be includible in the surviving spouse's estate at death unless consumed or given away.

Al only

BII only

CBoth l and II

DNeither I nor II

Answer : C

Question 5

Which of the following statements concerning the inclusion and valuation of all or part of a commercial annuity in the estate of an annuitant is correct?

AA life annuity with a period certain is includible to the extent of the present value of any remaining guaranteed payments.

BAn annuity is includible to the extent of the value determined by the special 10-year averaging rule.

CIf the executor elects the alternate valuation date an annuity is includible at its replacement cost 6 months after death.

DA joint and survivor annuity is includible to the extent that the survivor paid the purchase price of the contract.

Answer : A

Question 6

All the following statements concerning transfers at death under a will are correct EXCEPT:

AThe most appropriate way to sever a joint tenancy with right of survivorship is for the joint tenant-decedent to make a specific bequest of the property under a will.

BIf during life time a decedent disposed of property that was the subject of a specific bequest, ad emption occurs.

CIt is common for a will to contain a clause that exempts the executor from posting bond.

DSpecific bequests of a decedents property are satisfied prior to distribution of the decedents residuary estate.

Answer : A

Question 7

All the following trust provisions avoid causing the inclusion of an irrevocable life insurance trust in an insured's gross estate EXCEPT :

Aa trustee's power to pay estate expenses

Ba trustee's power to loan assets to the estate at the trustee's discretion

Ca trustee's power to purchase assets from the estate at the trustee's discretion

Da trust beneficiary's power to withdraw contributions to the trust

Answer : A

American College Fundamentals of Estate Planning test HS330 Exam Practice Test