Charitable Planning & Philanthropy Flashcards
7 cards from real CES practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Charitable Planning & Philanthropy flashcards as text
Under a Charitable Remainder Trust (CRT), after the income interest period ends, the remaining trust assets pass to:
Answer: A qualified charity
In a CRT, the 'remainder' interest is irrevocably designated to pass to a qualified charity after the non-charitable income interest period ends.
A Charitable Lead Trust (CLT) differs from a Charitable Remainder Trust (CRT) in that:
Answer: The charity receives the income interest first, with the remainder passing to non-charitable beneficiaries
In a CLT, the 'lead' interest (income stream) goes to charity first, and the remainder passes to non-charitable beneficiaries such as family members.
Which of the following best describes a Donor Advised Fund (DAF)?
Answer: A charitable giving account administered by a sponsoring organization where donors can recommend grants over time
A DAF is a charitable vehicle sponsored by a public charity; the donor makes an irrevocable contribution, receives an immediate deduction, and then recommends grants to qualifying charities over time.
For a Charitable Remainder Annuity Trust (CRAT), the required minimum payout rate is:
Answer: 5% of the initial fair market value of trust assets
IRC Section 664 mandates that a CRAT must distribute an annuity of at least 5% (and no more than 50%) of the net fair market value of assets at the time of contribution.
The primary distinction between a Charitable Remainder Annuity Trust (CRAT) and a Charitable Remainder Unitrust (CRUT) is:
Answer: A CRAT pays a fixed dollar annuity; a CRUT pays a fixed percentage of annually revalued trust assets
A CRAT distributes a fixed annuity determined at inception, while a CRUT distributes a fixed percentage of trust assets recalculated each year based on current fair market value.
To qualify as a valid Charitable Remainder Trust, the present value of the remainder interest passing to charity must be at least:
Answer: 10% of the initial net fair market value of assets transferred
Under IRC Section 664, the charitable remainder interest must equal at least 10% of the net fair market value of property transferred to the trust at the time of contribution.
Under IRC Section 4942, private foundations must distribute for charitable purposes at least what percentage of their net investment assets each year?
Answer: 5%
IRC Section 4942 imposes an excise tax on private foundations that fail to distribute at least 5% of the fair market value of their net investment assets annually for charitable purposes.