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

  1. A decedent's estate includes a closely held business valued at $2.4 million. The executor wants to defer estate tax payments. Which IRC section allows installment payments over up to 14 years?

    Answer: IRC Section 6166

    IRC Section 6166 allows estates with closely held business interests exceeding 35% of the adjusted gross estate to pay estate taxes in installments over up to 14 years.

  2. When calculating the present value of a remainder interest in a charitable remainder unitrust (CRUT), which interest rate published by the IRS is used?

    Answer: Section 7520 rate

    The Section 7520 rate, set monthly at 120% of the federal mid-term AFR, is used to value remainder interests in charitable split-interest trusts.

  3. A surviving spouse inherits a traditional IRA. Which distribution option is EXCLUSIVELY available to a surviving spouse beneficiary and not to other beneficiaries?

    Answer: Roll the IRA into their own IRA

    Only a surviving spouse can roll an inherited IRA into their own IRA, allowing them to delay RMDs until they reach age 73 and designate new beneficiaries.

  4. An estate planner calculates a client's net worth by summing all assets and subtracting liabilities. Which asset is generally EXCLUDED from the taxable gross estate?

    Answer: Life insurance owned by an irrevocable trust

    Life insurance held in an irrevocable life insurance trust (ILIT) for more than three years before death is excluded from the decedent's gross estate.

  5. Which financial ratio best measures a closely held business's ability to service its debt obligations from operating income when valuing it for estate purposes?

    Answer: Debt service coverage ratio

    The debt service coverage ratio (DSCR) measures net operating income relative to total debt service, reflecting the business's ability to meet debt obligations from operations.

  6. A grantor establishes a qualified personal residence trust (QPRT) and transfers their $900,000 home into it. What is the primary estate planning benefit?

    Answer: The gift tax value is reduced by the retained term interest

    With a QPRT, the taxable gift is the remainder interest — the full home value discounted by the grantor's retained right to live there — significantly reducing transfer taxes.

  7. Under the SECURE 2.0 Act, at what age must a traditional IRA account holder begin taking required minimum distributions (RMDs) if they were born in 1951?

    Answer: 73

    Under SECURE 2.0, individuals born in 1951 must begin RMDs at age 73, as the RMD age was raised from 72 to 73 starting in 2023.