Practice Test Geeks(CES) Certified Estate and Trust Specialist Practice Test
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Regulatory Framework & Compliance 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.

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  1. Under the generation-skipping transfer (GST) tax rules, what is the relationship required for a transfer to be classified as a 'direct skip'?

    Answer: Transfer to a person two or more generations below the transferor

    A direct skip is a transfer subject to estate or gift tax made to a 'skip person,' defined as a natural person two or more generations below the transferor.

  2. A trustee of a charitable remainder unitrust (CRUT) must distribute what percentage of the trust assets annually to income beneficiaries?

    Answer: A fixed percentage of trust assets revalued annually (minimum 5%)

    A CRUT must pay a fixed percentage (not less than 5% nor more than 50%) of the fair market value of its assets, revalued annually, to the income beneficiary.

  3. Under IRS regulations, a grantor trust is one in which the grantor is treated as owning trust assets for income tax purposes. Which IRC sections primarily establish grantor trust rules?

    Answer: IRC §§ 671-679

    IRC §§671-679 contain the grantor trust rules, specifying the conditions under which a grantor is treated as the owner of trust income and assets for income tax purposes.

  4. A trust company operating in multiple states must comply with which rule regarding fiduciary law when administering a trust?

    Answer: The law of the state specified in the trust document or the state with the most significant connection to the trust

    Under the UTC and conflicts of law principles, the applicable law is generally that specified in the trust document, or failing that, the jurisdiction with the most significant relationship to the trust.

  5. For a private foundation to avoid the self-dealing excise tax under IRC §4941, which of the following transactions between the foundation and a disqualified person would generally be permitted?

    Answer: Paying reasonable compensation to a disqualified person for personal services

    IRC §4941(d)(2)(E) provides an exception allowing private foundations to pay reasonable and necessary compensation to disqualified persons for personal services.

  6. Which federal law created the concept of the 'qualified disclaimer' as a tool in estate planning and trust administration?

    Answer: Tax Reform Act of 1976

    The Tax Reform Act of 1976 introduced the qualified disclaimer rules under IRC §2518, allowing beneficiaries to refuse transfers without gift tax consequences.

  7. Under the Uniform Fiduciary Income and Principal Act (UFIPA), a trustee may exercise the power to convert a trust from an income trust to a total return unitrust without court approval if:

    Answer: The trustee obtains written consent from all qualified beneficiaries and no beneficiary objects within a specified notice period

    UFIPA allows non-judicial unitrust conversions if the trustee provides notice and obtains consent from qualified beneficiaries without objection, simplifying the conversion process.