NAB Estate and Tax Planning 2

Question 1

What is the annual gift tax exclusion amount per recipient for 2024?

Accepted Answer

$18,000

Answer

The IRS set the annual gift tax exclusion at $18,000 per recipient for 2024, up from $17,000 in 2023.

Question 2

Which trust allows a grantor to retain an annuity interest for a fixed term while transferring remaining assets to heirs at a reduced gift tax cost?

Accepted Answer

Grantor Retained Annuity Trust (GRAT)

Answer

A GRAT lets the grantor receive fixed annuity payments for a set term; any growth above the IRS hurdle rate passes to heirs gift-tax free.

Question 3

A Charitable Remainder Unitrust (CRUT) pays income beneficiaries what type of distribution?

Accepted Answer

A fixed percentage of the trust's fair market value each year

Answer

A CRUT pays a fixed percentage of the trust's annually revalued assets, so distributions fluctuate with investment performance.

Question 4

Which trust type is specifically designed to hold life insurance policies outside the insured's taxable estate?

Accepted Answer

Irrevocable Life Insurance Trust (ILIT)

Answer

An ILIT owns the policy, so death proceeds are excluded from the insured's gross estate while still providing liquidity to heirs.

Question 5

For a gift to qualify for the annual gift tax exclusion, it must be which type of interest?

Accepted Answer

Present interest

Answer

Only present-interest gifts—where the recipient has immediate use and enjoyment—qualify for the annual exclusion.

(NAB) National Australia Bank Practice Test