HS-330 Online Practice Questions and Answers
Which of the following statements concerning a power of appointment is (are) correct?
-
A power of appointment can be designed to restrict the donee's right to appoint the property in favor of a specific class of recipients.
-
A power of appointment can be designed to restrict the time period during which the donee may exercise the power.
A.
Neither 1 nor 2
B.
2 only
C.
Both 1 and 2
D.
1 only
All the following assets owned by a decedent pass by operation of law or by contract EXCEPT
A. death benefits of a pension plan payable to a named beneficiary
B. life insurance payable to a named beneficiary
C. probate assets passing under the terms of a valid will
D. jointly owned real estate passing to the surviving joint tenant
In addition to substantial probate assets, a married man with two minor children has a $1,000,000 ordinary life insurance policy payable to his estate. He wants to make certain that if he predeceases his wife the death proceeds will be available to provide income for his wife during her lifetime and to provide for their two children after her death. He would like the policy and/or its death proceeds to be as free of federal gift and estate taxes as possible with respect to both him and his wife. Which of the following courses of action would best accomplish these objectives?
A. Assign the policy to an irrevocable inter vivos trust with five and five powers and designate the trustee to receive the death proceeds
B. Assign the policy to his wife who will establish a revocable inter vivos trust to receive the death proceeds
C. Establish a revocable inter vivos trust and designate the trustee to receive death proceeds
D. Designate his wife as beneficiary and she will establish a testamentary trust in her will to receive the proceeds at her subsequent death
All the following are steps in calculating a decedent's maximum estate tax marital deduction EXCEPT:
A. Subtract the allowable expenses and debts to determine the adjusted gross estate.
B. Subtract the applicable exclusion amount available in the year of the decedent's death.
C. Compute the decedent's gross estate.
D. Determine the net amount of property in the gross estate that passes to the surviving spouse in a manner qualifying for the marital deduction.
All the following powers held by the grantor of an irrevocable trust will cause the trust assets to be brought back into the estate of the grantor EXCEPT the power to
A. terminate the trust
B. designate who shall enjoy the trust income
C. add principal to the trust
D. change the trust remainderpersons
Which of the following statements concerning the obligation of the personal representative of a decedent to file a federal estate tax return is (are) correct?
1.
A return must be filed by a decedent's estate if the gross estate plus adjusted taxable gifts equals the applicable exclusion amount or more, even though no federal estate tax is due.
2.
Unless extensions are granted, the return must be filed and the tax paid within 9 months of the decedent's death.
A. 1 only
B. Neither 1 nor 2
C. Both 1 and 2
D. 2 only
A married man is the sole owner of a small business with an estate tax value of $500,000. In addition, he and his wife own an office building as joint tenants with right of survivorship which they purchased five years ago. The building has an estate tax value of $1,500,000. They are considering dissolving the joint tenancy and retitling the building in the name of the husband as sole owner. Which of the following statements concerning this action is (are) correct?
1.
If the husband dies first, it would be easier to qualify his estate for a Section 303 redemption of his business interest.
2.
If the husband dies first, the probate costs of his estate could be increased.
A. 2 only
B. 1 only
C. Neither 1 nor 2
D. Both 1 and 2
Which of the following statements concerning the inclusion in a decedent-employee's gross estate of a lump-sum distribution from a qualified retirement plan to a beneficiary other than the employee's estate is (are) correct?
1.
Lump-sum distributions of payments attributable to the employer's contributions are excluded from the gross estate.
2.
Lump-sum distributions of payments attributable to the decedent-employee's contributions are excluded from the gross estate.
A. Both 1 and 2
B. Neither 1 nor 2
C. 1 only
D. 2 only
Under the terms of his will, a man left his residuary estate to a testamentary trust for the benefit of his wife. Which of the following powers with respect to the trust will cause all the trust principal to be includible in the gross estate of the widow for federal estate tax purposes?
A. The power of the widow to direct the trustee to use trust assets to pay her personal debts
B. The power of the trustee in its sole discretion to distribute trust assets to the widow for any reason satisfactory to the trustee
C. The testamentary limited or special power of the widow to direct the trustee to distribute trust assets to her heirs.
D. The power of the widow each year to direct the trustee to pay her the greater of 5 percent of the trust principal or $5,000
A man established and funded an irrevocable trust and named a bank as trustee. All income from the trust is to be paid to his four grandchildren. Which of the following powers retained by the grantor of the trust will cause all or a portion of the trust assets to be includible in his gross estate for federal estate tax purposes?
1.
The power to add principal to the trust
2.
The power to vary the amounts of trust income paid to each grandchild
A. Neither 1 nor 2
B. Both 1 and 2
C. 1 only
D. 2 only