Estate Planning Flashcards
7 cards from real CCA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Estate Planning flashcards as text
What is the main purpose of an irrevocable life insurance trust (ILIT)?
Answer: Keep life insurance proceeds out of the insured's taxable estate
An ILIT owns the policy so the death benefit is not included in the insured's gross estate.
Why are 'Crummey powers' used in irrevocable trusts?
Answer: To qualify gifts to the trust for the annual gift exclusion
A temporary withdrawal right turns a gift to the trust into a present interest that qualifies for the annual exclusion.
What does a spendthrift clause in a trust do?
Answer: Keeps a beneficiary's creditors from reaching trust assets before distribution
A spendthrift clause bars beneficiaries from assigning their interest and blocks most creditors before distribution.
A charitable remainder trust (CRT) typically provides:
Answer: An income stream to noncharitable beneficiaries, then the remainder to charity
A CRT pays income to named people for a term or for life, and the rest goes to charity afterward.
What is the purpose of a pour-over will?
Answer: Transfer assets left outside a trust into that trust at death
A pour-over will sends any assets not already in the living trust into it, though those assets still go through probate.
Which trust is commonly used to provide for a disabled beneficiary without disqualifying them from means-tested government benefits?
Answer: Special (supplemental) needs trust
A special needs trust supplements, rather than replaces, benefits like SSI and Medicaid.
A QTIP trust allows a decedent to:
Answer: Claim the marital deduction while controlling who gets the remainder
QTIP property qualifies for the marital deduction if the spouse gets all income for life, while the decedent picks the remainder beneficiaries.