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
Which type of trust allows the grantor to serve as trustee and retains the right to revoke or amend the trust during their lifetime?
Answer: Revocable living trust
A revocable living trust can be amended, revoked, or terminated by the grantor at any time, and the grantor typically serves as their own trustee while alive and competent.
What is the primary purpose of a Special Needs Trust (SNT) for a disabled beneficiary?
Answer: Preserve a disabled beneficiary's eligibility for government benefits while supplementing their care with trust assets
An SNT supplements the care of a disabled beneficiary without disqualifying them from means-tested public benefits like Medicaid or SSI by keeping the trust assets separate.
In a Charitable Lead Annuity Trust (CLAT), which party receives annuity payments during the trust term?
Answer: The designated charitable organization
In a CLAT, the charity receives fixed annuity payments for the trust term, after which the remaining assets pass to the grantor's heirs, often with minimal gift tax.
What are 'Letters Testamentary' in the estate administration process?
Answer: A court-issued document authorizing the executor to act on behalf of the decedent's probate estate
Letters Testamentary are issued by a probate court and grant the executor the legal authority to access accounts, sell assets, and distribute the estate.
Which trust strategy is most commonly employed to transfer a closely held family business to the next generation with minimal gift tax?
Answer: Grantor Retained Annuity Trust (GRAT) funded with business interests
A GRAT funded with business interests allows any appreciation above the IRS Section 7520 rate to pass to heirs gift-tax-free, making it effective for rapidly appreciating assets like family business equity.
What is the 'rule against perpetuities' in trust law?
Answer: A common law rule limiting how long a private trust can remain in existence, typically tied to a life in being plus 21 years
The rule against perpetuities is a common law doctrine preventing trusts from lasting indefinitely, though many US states have abolished or modified it to permit dynasty trusts.