CPB Estate Planning & Trust Services Flashcards
6 cards from real CPB practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CPB Estate Planning & Trust Services flashcards as text
What is the unlimited marital deduction in federal estate tax planning?
Answer: An unlimited deduction allowing tax-free transfer of assets to a surviving US citizen spouse
The unlimited marital deduction allows an unlimited amount of assets to pass to a surviving US citizen spouse estate-tax-free, though this only defers—not eliminates—the estate tax.
A Qualified Terminable Interest Property (QTIP) trust is primarily structured to:
Answer: Provide the surviving spouse with income for life while ensuring assets ultimately pass to the grantor's chosen remainder beneficiaries
A QTIP trust qualifies for the marital deduction while allowing the first spouse to die to control who receives the remaining assets after the surviving spouse passes away.
What is a dynasty trust in the context of private banking estate planning?
Answer: A long-term trust structured to hold and grow family wealth across multiple generations while avoiding estate tax at each generation
A dynasty trust is designed to last for multiple generations (sometimes in perpetuity in states without a rule against perpetuities), sheltering assets from estate taxes at each generational transfer.
Which legal document empowers a designated person to make medical and healthcare decisions for a client who becomes incapacitated?
Answer: Durable power of attorney for healthcare (healthcare proxy)
A durable power of attorney for healthcare designates a healthcare agent to make medical decisions on behalf of an incapacitated person, surviving the principal's incapacity.
What is the primary estate planning function of a Family Limited Partnership (FLP)?
Answer: Transfer wealth to family members at discounted valuations while the senior generation retains some management control
An FLP allows seniors to gift limited partnership interests to heirs at discounts for lack of control and marketability, effectively transferring more wealth while using less of the gift tax exemption.
In federal estate tax planning, what does 'portability' of the estate tax exemption mean?
Answer: A surviving spouse's ability to elect to use the deceased spouse's unused federal estate tax exemption
Portability allows a surviving spouse to elect the Deceased Spousal Unused Exclusion (DSUE), effectively stacking both spouses' exemptions to shield a larger combined estate.