CES Charitable Planning & Philanthropy 2

Question 1

Which charitable arrangement involves a donor transferring assets directly to a charity in exchange for fixed annuity payments for the donor's lifetime?

Accepted Answer

Charitable Gift Annuity

Answer

A Charitable Gift Annuity (CGA) is a contract between the donor and the charity; the donor transfers assets, and the charity agrees to pay a fixed annuity for the donor's (and/or a second beneficiary's) lifetime.

Question 2

In a Pooled Income Fund, contributions from multiple donors are:

Accepted Answer

Commingled in a fund managed by the charity, with each donor receiving a pro-rata share of income

Answer

A Pooled Income Fund commingles gifts from multiple donors into a single fund managed by the charity; each donor receives a proportionate share of the fund's actual net income.

Question 3

The key advantage of a Net Income with Makeup Charitable Remainder Unitrust (NIMCRUT) for donors contributing illiquid assets is:

Accepted Answer

The trust can accumulate income in low-income years and distribute accumulated amounts in later high-income years

Answer

A NIMCRUT distributes the lesser of net income or the unitrust amount, and the 'makeup' provision allows accumulated deficiencies to be paid out in future years when trust income exceeds the unitrust amount.

Question 4

A 'bargain sale' to a charity occurs when:

Accepted Answer

A donor sells property to a charity for less than its fair market value

Answer

In a bargain sale, the donor sells property to a charity at below fair market value; the excess of fair market value over the sale price is treated as a charitable contribution, and the sale portion triggers partial gain recognition.

Question 5

When a donor receives a tangible benefit (quid pro quo) in exchange for a charitable contribution, the deductible amount is:

Accepted Answer

The total contribution amount minus the fair market value of the benefit received

Answer

Under quid pro quo contribution rules, only the amount exceeding the fair market value of the benefit received qualifies as a charitable deduction.

(CES) Certified Estate and Trust Specialist Practice Test

(CES) Certified Estate and Trust Specialist Practice Test

CES Charitable Planning & Philanthropy 2