Question 1

When dealing with property titling, what deals with property that has been acquired by the efforts of either spouse during their marriage while living in a community property state?

Accepted Answer

A)  Community Property
B)  Marriage Law
C)  Common Law
D)  Law of Matrimony A

Question 2

According to the Certified Financial Planner Board of Standards, Inc. who is to explain to clients the estate planning process?

Accepted Answer

A)  Accountant
B)  Lawyer
C)  Financial Planner
D)  Investment Broker C

Question 3

Smith received documents that discuss the issues of Testate succession and Interstate succession that has him confused. What is this document about?

Accepted Answer

A)  Law Operations
B)  Tenancy in common
C)  Probate
D)  Ownership property C

Question 4

Betsy's husband just died. After 45 years of marriage she isn't very upset. But she is concerned that her stepchildren from his prior marriage will force her to sell the house they bought their first year of marriage to get a portion of the sale price. What is true of Betsy's situation?

Accepted Answer

A)  The selling of her home is decided by what is said in her dead husband's will.
B)  The selling of her home is decided by what is said within her dead husbands trust.
C)  At the death of a co-owner, the decedent's interest automatically passes to the surviving owners.
D)  All of the above.

Question 5

Which of the following is considered a traditional relationship?

Accepted Answer

A)  Victor and Rebecca have been legally married for thirty years. Rebecca was previously divorced. She pays alimony to her previous spouse, with whom she had two children with.
B)  Robert and Patricia have been legally married for four years. They were both previously married and divorced and have no children or any other lasting ties with their former spouses.
C)  Matthew and Gail have been living together for fifty years, but have never been legally married. Neither of them has a previous spouse or any children.
D)  Peter and Susan have been married for ten years. Susan was previously married and shares custody of her son with her former spouse.

Question 6

What is true of split gifts?

Accepted Answer

A)  Available only to married couples who file a joint return.
B)  Available only to married couples who file married but filing separately.
C)  Available only to single individuals who file jointly.
D)  Available only to legally separated couples who wish to gift.

Question 7

Which of the following is NOT a source of estate liquidity?

Accepted Answer

A)  Life insurance proceeds
B)  Marketable securities
C)  The decedent's accounts payable
D)  Other trusts

Question 8

Atticus just refused a broken down mansion due to the amount of work it needs. Now the original estate plan needs changing. What is the best option for post-mortem estate planning in this situation?

Accepted Answer

A)  IRD tax deductions
B)  Qualified Disclaimers
C)  Both A and B
D)  Neither A nor B

Question 9

Marsha wants to a trust in which the management and distributions of terms are very detailed and would override any authority over trust property. What would be her best option?

Accepted Answer

A)  Conservatorship
B)  Durable power of attorney
C)  Living trust
D)  None of the above

Question 10

There are no amounts of property that may qualify for the marital deduction; however at the death of the husband the wife was given other property. The interest of the property transferred to another. What is governs this situation?

Accepted Answer

A)  Terminal interest rule
B)  Terminal interest dates
C)  Terminal interest and payout exceptions
D)  Terminal interest and exemptions

Question 11

What is true of pooled income funds?

Accepted Answer

A)  Additional contributions are allowed
B)  Sprinkling is not allowed
C)  The funds cannot invest in tax-exempt securities.
D)  All of the above.

Question 12

What does the transfer of property to an irrevocable trust usually results in?

Accepted Answer

A)  Taxable gift
B)  Non-taxable gift
C)  Rules against perpetuities
D)  Rules for perpetuities

Question 13

Carter needs a will written but he doesn't want to deal with all the standard formalities of witnesses - he has no friends. What type of will is best suited for Carter?

Accepted Answer

A)  Nuncupative will
B)  Pour-over will
C)  Holographic will
D)  None of the above.

Question 14

William and Bill jointly own a business. William hates Bill and had decided to sell his share of the business to Bill to avoid seeing him daily. However, he is concerned about gift taxation and their buy-sell agreement. Under what condition would there be owed taxes?

Accepted Answer

A)  If William just gives his portion of the business to Bill.
B)  If William sells to someone other than Bill.
C)  If William pays under fair market value.
D)  All of the above.

Question 15

Sheila was is 96 years old and paid-off her mortgage 60 years ago. The price of the house was a whopping $23,000. The date of death is used for valuation purposes. At this time, if Sheila gifts her house to her grandson, what method would be used to determine federal transfer taxes?

Accepted Answer

A)  Original market price
B)  Fair market price
C)  Above market price
D)  Valuation tax price

Question 16

What is the distinguishing feature of charitable lead trusts?

Accepted Answer

A)  They can hold tax-exempt securities.
B)  Additional contributions are not allowed.
C)  Must invade corpus when income is insufficient for payout.
D)  The donor in the charitable lead trust gives away an income stream and receives a remainder interest.

Question 17

What is true of IRC Section 2056 (d)?

Accepted Answer

A)  It deals with American citizens.
B)  It deals with minors.
C)  It deals with noncitizen spouses.
D)  None of the above.

Question 18

Installment notes are transfer techniques that provide for payment of the purchase price over a period of years. What triggers a self-canceling installment note?

Accepted Answer

A)  Death of the person holding the note.
B)  The seller has changed their minds about the sell.
C)  The buyer changes their mind about the purchase.
D)  All of the above.

Question 19

What type of spouse does not qualify for the unlimited marital deduction?

Accepted Answer

A)  A second spouse
B)  A same-sex spouse
C)  A non-U.S. citizen's spouse
D)  A spouse of fewer than 2 years

Question 20

Joe doesn't want to be worried with issues concerning his estate and rather have someone else make decisions concerning the property. What does Joe need?

Accepted Answer

A)  Power of Attorney
B)  Crummey Provisions
C)  Power of Appointment
D)  Limited Power

Exam 2: Estate Planning