Practice Test Geeks(CES) Certified Estate and Trust Specialist Practice Test
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Estate Planning Principles & Strategies 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 Estate Planning Principles & Strategies flashcards as text

  1. A dynasty trust is primarily designed to:

    Answer: Preserve wealth across multiple generations by avoiding repeated transfer taxes

    Dynasty trusts are long-term trusts structured to hold assets for multiple generations, minimizing estate and GST taxes at each generational transfer.

  2. What is the generation-skipping transfer (GST) tax exemption designed to prevent?

    Answer: Bypassing one or more generations of estate taxes by transferring directly to grandchildren or lower

    The GST tax is imposed on transfers that skip a generation, ensuring these transfers are taxed similarly to transfers that pass through each generation.

  3. An Irrevocable Life Insurance Trust (ILIT) keeps life insurance proceeds out of the taxable estate primarily because:

    Answer: The trust, not the insured, owns the policy, so the proceeds are not included in the insured's estate

    When an ILIT owns the life insurance policy, the death benefit is excluded from the insured's taxable estate because the insured holds no incidents of ownership.

  4. Which of the following transfers would trigger the three-year inclusion rule under IRC §2035?

    Answer: Gifting a life insurance policy owned by the decedent within three years of death

    Under IRC §2035, life insurance policies transferred within three years of death are pulled back into the decedent's gross estate.

  5. A pour-over will is most commonly used in conjunction with:

    Answer: A revocable living trust

    A pour-over will directs that any assets not already transferred to a revocable living trust at death are poured into the trust, ensuring unified administration.

  6. Which of the following best describes 'portability' in federal estate tax planning?

    Answer: A surviving spouse's right to use the deceased spouse's unused estate tax exemption

    Portability allows a surviving spouse to elect to use the deceased spouse's unused exemption (DSUE), potentially doubling the amount that can pass estate-tax-free.

  7. In an installment sale to an Intentionally Defective Grantor Trust (IDGT), which of the following is TRUE?

    Answer: No capital gains tax is triggered because grantor trust rules treat the grantor and trust as the same taxpayer

    Because the grantor and the IDGT are treated as the same entity for income tax purposes, the installment sale is disregarded and no capital gains are recognized.