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Estate Planning Principles & Strategies Flashcards

7 cards from real CEA 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 Principles & Strategies flashcards as text

  1. A testator wants to leave property to a grandchild but fears the parents may mismanage funds. Which trust structure is most appropriate?

    Answer: Spendthrift trust

    A spendthrift trust restricts the beneficiary's ability to assign or alienate the trust interest, protecting assets from both the beneficiary and their creditors.

  2. Under IRC Section 2036, assets transferred to an irrevocable trust are included back in the gross estate if the grantor retained:

    Answer: Possession or enjoyment of the transferred property

    IRC § 2036 pulls assets back into the gross estate when the decedent retained the right to possession, enjoyment, or income from the transferred property.

  3. Which estate planning document designates who may make medical decisions for an incapacitated individual?

    Answer: Healthcare proxy (medical power of attorney)

    A healthcare proxy or medical power of attorney appoints an agent to make healthcare decisions when the principal is incapacitated.

  4. A couple owns a home as joint tenants with right of survivorship. At the first spouse's death, what happens to the deceased spouse's basis in the property?

    Answer: Only the deceased spouse's half receives a step-up in basis

    For joint tenancy property in non-community property states, only the deceased joint tenant's half-interest receives a step-up in basis to date-of-death FMV.

  5. A QTIP trust qualifies for the marital deduction because it requires:

    Answer: The surviving spouse to receive all trust income annually or more frequently

    A Qualified Terminable Interest Property trust qualifies for the marital deduction only if the surviving spouse receives all net income at least annually.

  6. Which generation-skipping transfer tax (GSTT) exemption amount applies in 2024?

    Answer: $13,610,000

    For 2024, the GST tax exemption is $13,610,000 per person, matching the unified federal estate and gift tax exemption.

  7. What is the primary disadvantage of a revocable living trust compared to a will?

    Answer: Funding the trust during the grantor's lifetime requires transferring assets into it

    The main drawback of a revocable living trust is the effort and cost of re-titling assets into the trust during the grantor's lifetime — unfunded trusts do not avoid probate.