AEP Taxation in Estate Planning

Question 1

Which federal tax is directly associated with transferring property at death?

Accepted Answer

Estate tax

Answer

Income tax

Answer

Gift tax

Answer

Sales tax

Question 2

Which of the following is NOT subject to federal estate tax?

Accepted Answer

Life insurance not owned by the deceased

Answer

Property held in a revocable trust

Answer

Life insurance owned by the deceased

Answer

Jointly owned property

Question 3

What is the annual exclusion amount for gifts under the federal gift tax (as of recent IRS rules)?

Accepted Answer

$17,000

Answer

$10,000

Answer

$15,000

Answer

$25,000

Question 4

What does the step-up in basis rule apply to?

Accepted Answer

Inherited assets

Answer

Income earned after death

Answer

Assets sold before death

Answer

Life insurance proceeds

Question 5

Which tax applies when a person gives over the annual exclusion amount to another individual?

Accepted Answer

Gift tax

Answer

Estate tax

Answer

Capital gains tax

Answer

Sales tax

Question 6

How is a Qualified Personal Residence Trust (QPRT) used in estate planning?

Accepted Answer

To reduce estate and gift taxes

Answer

To sell real estate quickly

Answer

To protect assets from lawsuits

Answer

To manage rental properties

Question 7

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

Accepted Answer

Avoidance of estate tax via skipping generations

Answer

Charitable donations

Answer

Direct transfers to children

Answer

Transfers to spouses

Question 8

Which of the following is true about marital deductions in estate planning?

Accepted Answer

They allow unlimited transfers between spouses

Answer

They are capped at $1 million.

Answer

They apply only to siblings.

Answer

They are limited to non-citizens.

Question 9

What is the purpose of the federal estate and gift tax exemption amount?

Accepted Answer

To provide a tax-free threshold for asset transfers

Answer

To limit property ownership rights

Answer

To charge taxes on all transfers

Answer

To fund Social Security benefits