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
Which of the following is the primary goal of a charitable lead trust (CLT)?
Answer: To pay income to charity for a set period, then pass remaining assets to heirs
In a CLT, the charity receives income payments for the trust's term, after which the remaining assets pass to non-charitable beneficiaries such as family members.
For federal estate tax purposes, the alternate valuation date is:
Answer: Six months after the date of death, available only if it reduces both gross estate value and estate tax
The alternate valuation date is six months after the date of death and may only be elected if it reduces both the gross estate value and the resulting federal estate tax.
What distinguishes a testamentary trust from a living (inter vivos) trust?
Answer: A testamentary trust is created by the decedent's will and only takes effect at death
A testamentary trust is established within a will and only becomes operative upon the testator's death, passing through probate before the trust is funded.
When a decedent holds property in joint tenancy with right of survivorship, what portion is generally included in their gross estate?
Answer: 100% unless the surviving joint tenant can prove their own contribution
For non-spousal joint tenancies, 100% of the property is included in the decedent's estate unless the survivor can prove they contributed to its acquisition.
A special needs trust (SNT) is designed primarily to:
Answer: Supplement government benefits for a disabled person without disqualifying them from those benefits
An SNT holds assets for a disabled beneficiary in a way that supplements, rather than replaces, government benefits like Medicaid and SSI.
Which of the following correctly describes the annual gift tax exclusion?
Answer: It permits up to a specified dollar amount per recipient per year to be transferred free of gift tax
The annual gift tax exclusion allows a donor to give up to the annual limit (adjusted for inflation) per recipient per year without using any lifetime exemption.
Under the 'five-and-five' power, a trust beneficiary can withdraw each year the greater of:
Answer: 5% of trust corpus or $5,000, whichever is greater
A 'five-and-five' power allows a beneficiary to withdraw annually the greater of 5% of the trust corpus or $5,000, which lapses without inclusion in the beneficiary's estate.