CSS Estate Planning & Wealth Transfer

Question 1

Which document allows a person to designate someone to manage their financial affairs if they become incapacitated?

Accepted Answer

Durable power of attorney

Answer

A durable power of attorney remains valid even if the principal becomes incapacitated, allowing the agent to manage financial affairs.

Question 2

What is the primary advantage of a revocable living trust over a will?

Accepted Answer

It avoids probate

Answer

A revocable living trust transfers assets directly to beneficiaries without going through the probate process, saving time and costs.

Question 3

Under current US law, what is the annual gift tax exclusion per recipient (2024)?

Accepted Answer

$18,000

Answer

The annual gift tax exclusion for 2024 is $18,000 per recipient, allowing tax-free gifts up to that amount each year.

Question 4

Which type of trust is commonly used to remove life insurance proceeds from a taxable estate?

Accepted Answer

Irrevocable life insurance trust (ILIT)

Answer

An ILIT owns the life insurance policy so that proceeds are paid to the trust rather than the estate, keeping them out of the taxable estate.

Question 5

What does 'stepped-up basis' mean for inherited assets?

Accepted Answer

The asset's cost basis is reset to its fair market value at the date of death

Answer

A stepped-up basis resets the asset's cost basis to its fair market value at the date of death, eliminating capital gains tax on pre-death appreciation.

(CSS) Certified Senior Specialist Practice Test

(CSS) Certified Senior Specialist Practice Test

CSS Estate Planning & Wealth Transfer