CRPC Estate Planning Objectives 3

Question 1

An irrevocable life insurance trust (ILIT) is primarily used to:

Accepted Answer

Keep life insurance proceeds out of the insured's taxable estate

Answer

An ILIT owns a life insurance policy so that the death benefit is excluded from the insured's gross estate, reducing potential estate taxes.

Question 2

The annual gift tax exclusion allows an individual to give how much per recipient in 2024 without using their lifetime exemption?

Accepted Answer

$18,000

Answer

For 2024, the annual gift tax exclusion is $18,000 per recipient, indexed for inflation in $1,000 increments.

Question 3

What is a generation-skipping transfer (GST) tax designed to prevent?

Accepted Answer

Avoidance of estate taxes by skipping a generation of heirs

Answer

The GST tax imposes an additional tax on transfers made to individuals two or more generations below the transferor to prevent estate tax avoidance.

Question 4

Which estate planning strategy involves transferring appreciating assets to family members now so future growth occurs outside the taxable estate?

Accepted Answer

Grantor retained annuity trust (GRAT)

Answer

A GRAT allows the grantor to transfer assets to a trust, retain an annuity for a term, and if growth exceeds the IRS hurdle rate, the excess passes to heirs gift-tax free.

Question 5

A special needs trust is established primarily to:

Accepted Answer

Provide for a disabled beneficiary without disqualifying them from government benefits

Answer

A special needs trust supplements — but does not replace — government benefits, ensuring the beneficiary retains eligibility for programs like Medicaid and SSI.

CRPC - Chartered Retirement Planning Counselor Practice Test

CRPC - Chartered Retirement Planning Counselor Practice Test

CRPC Estate Planning Objectives 3