CEA Asset Management & Wealth Transfer 4

Question 1

Which type of trust allows a surviving spouse to receive income for life while preserving the trust principal for children from a prior marriage?

Accepted Answer

Qualified Terminable Interest Property (QTIP) Trust

Answer

A QTIP trust provides the surviving spouse with all income for life and qualifies for the marital deduction, while the grantor controls who receives the remainder at the surviving spouse's death.

Question 2

For 2024, the annual gift tax exclusion allows each donor to give how much per recipient without using any lifetime exemption?

Accepted Answer

$18,000

Answer

The annual gift tax exclusion for 2024 is $18,000 per recipient, indexed for inflation, and married couples can split gifts to effectively give $36,000 per recipient.

Question 3

Which of the following is a key advantage of transferring assets to an irrevocable life insurance trust (ILIT)?

Accepted Answer

Death benefit proceeds are excluded from both the insured's gross estate and the beneficiaries' income

Answer

Properly structured ILITs keep life insurance proceeds out of the taxable estate and pass the death benefit to beneficiaries income-tax-free.

Question 4

A client funds a Charitable Lead Annuity Trust (CLAT). Which party benefits first?

Accepted Answer

The designated charity receives annuity payments for the trust term

Answer

In a CLAT, the charity receives fixed annuity payments for a specified term, after which the remaining assets pass to non-charitable beneficiaries (typically family members).

Question 5

What is the purpose of a 'pour-over will' in an estate plan that includes a revocable living trust?

Accepted Answer

To direct any assets not already in the trust at death to flow into the trust through probate

Answer

A pour-over will acts as a safety net, capturing any assets that were not transferred to the trust during the grantor's lifetime and directing them into the trust via probate.

(CEA) Certified Estate Advisor Practice Test

(CEA) Certified Estate Advisor Practice Test

CEA Asset Management & Wealth Transfer 4