American College HS330 Exam Questions & Answers

Which of the following statements concerning a grantor-retained annuity trust (GRAT) is correct?

A. The transfer of property to the trust becomes a completed gift for gift tax purposes only at the termination of the grantor's retained interest term.

B. The trust is used as a device for shifting income tax on the current trust income to the remainderperson(s).

C. If the grantor dies before the retained interest term ends, the estate tax benefits are reduced.

D. The grantor retains control of the trust property until revocation or death.

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 (are) correct?

1.

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

2.

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

A. 2 only

B. Both 1 and 2

C. Neither 1 nor 2

D. 1 only

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. add principal to the trust

C. designate who shall enjoy the trust income

D. change the trust remainderpersons