CES Charitable Planning & Philanthropy

Question 1

Under a Charitable Remainder Trust (CRT), after the income interest period ends, the remaining trust assets pass to:

Accepted Answer

A qualified charity

Answer

In a CRT, the 'remainder' interest is irrevocably designated to pass to a qualified charity after the non-charitable income interest period ends.

Question 2

A Charitable Lead Trust (CLT) differs from a Charitable Remainder Trust (CRT) in that:

Accepted Answer

The charity receives the income interest first, with the remainder passing to non-charitable beneficiaries

Answer

In a CLT, the 'lead' interest (income stream) goes to charity first, and the remainder passes to non-charitable beneficiaries such as family members.

Question 3

Which of the following best describes a Donor Advised Fund (DAF)?

Accepted Answer

A charitable giving account administered by a sponsoring organization where donors can recommend grants over time

Answer

A DAF is a charitable vehicle sponsored by a public charity; the donor makes an irrevocable contribution, receives an immediate deduction, and then recommends grants to qualifying charities over time.

Question 4

For a Charitable Remainder Annuity Trust (CRAT), the required minimum payout rate is:

Accepted Answer

5% of the initial fair market value of trust assets

Answer

IRC Section 664 mandates that a CRAT must distribute an annuity of at least 5% (and no more than 50%) of the net fair market value of assets at the time of contribution.

Question 5

The primary distinction between a Charitable Remainder Annuity Trust (CRAT) and a Charitable Remainder Unitrust (CRUT) is:

Accepted Answer

A CRAT pays a fixed dollar annuity; a CRUT pays a fixed percentage of annually revalued trust assets

Answer

A CRAT distributes a fixed annuity determined at inception, while a CRUT distributes a fixed percentage of trust assets recalculated each year based on current fair market value.

(CES) Certified Estate and Trust Specialist Practice Test

(CES) Certified Estate and Trust Specialist Practice Test

CES Charitable Planning & Philanthropy