Estate Planning Flashcards
7 cards from real CIM 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 flashcards as text
Which feature distinguishes a charitable remainder annuity trust (CRAT) from a charitable remainder unitrust (CRUT)?
Answer: A CRAT pays a fixed dollar amount and cannot accept additional contributions
A CRAT pays a fixed annuity based on the initial value and prohibits additional contributions, while a CRUT pays a fixed percentage of annually revalued assets.
What is the minimum annual payout rate for a charitable remainder trust?
Answer: 5%
A charitable remainder trust must pay out at least 5% (and no more than 50%) annually to non-charitable beneficiaries.
Under the SECURE Act, a non-eligible designated beneficiary who inherits an IRA in 2026 generally must:
Answer: Empty the account by the end of the 10th year after the owner's death
Most non-spouse designated beneficiaries are subject to the 10-year rule, with annual RMDs also required if the owner had already begun RMDs.
Which beneficiary is an 'eligible designated beneficiary' who may stretch inherited IRA distributions over life expectancy?
Answer: The owner's surviving spouse
Surviving spouses, minor children of the owner, disabled or chronically ill individuals, and those not more than 10 years younger qualify as eligible designated beneficiaries.
In a business buy-sell arrangement, what is a key advantage of a cross-purchase agreement over an entity redemption agreement?
Answer: Surviving owners receive an increased cost basis in the purchased shares
In a cross-purchase, surviving owners buy shares directly and get a basis equal to the purchase price, which an entity redemption does not provide.
A client wants an agent to manage her finances if she becomes incapacitated. Which document remains effective upon incapacity?
Answer: A durable power of attorney
A durable power of attorney includes language allowing it to survive the principal's incapacity, unlike a non-durable power.
Why can gifts of limited partnership interests in a family limited partnership (FLP) be valued below their pro rata share of underlying assets?
Answer: Discounts for lack of control and lack of marketability apply
Limited partners cannot control the entity or easily sell their interests, supporting valuation discounts for gift and estate tax purposes.