AAFM Estate Planning and Trusts

Question 1

Which document directs how a deceased person's assets are to be distributed and names an executor to administer the estate?

Accepted Answer

Last will and testament

Answer

Living trust

Answer

Power of attorney

Answer

Beneficiary designation form

Question 2

Which type of trust allows the grantor to retain control and revoke the trust during their lifetime while avoiding probate at death?

Accepted Answer

Revocable living trust

Answer

Irrevocable life insurance trust

Answer

Charitable remainder trust

Answer

Qualified personal residence trust

Question 3

An irrevocable life insurance trust (ILIT) is primarily used to exclude life insurance proceeds from which tax?

Accepted Answer

Federal estate tax

Answer

Income tax

Answer

Generation-skipping transfer tax

Answer

State inheritance tax

Question 4

The federal estate tax exemption in 2024 allows an individual to transfer up to approximately how much without incurring federal estate tax?

Accepted Answer

$13.61 million

Answer

$3.5 million

Answer

$7.0 million

Answer

$25 million

Question 5

Which trust strategy transfers appreciating assets out of an estate by requiring the trust to pay the grantor a fixed annuity for a set term?

Accepted Answer

GRAT

Answer

IDGT

Answer

CLAT

Answer

SLAT

Question 6

Probate is a legal process that validates a will and distributes estate assets under court supervision, which is typically known for being what?

Accepted Answer

Costly, time-consuming, and public

Answer

Fast and private

Answer

Completely tax-free

Answer

Only applicable to large estates