HS-330 Online Practice Questions and Answers

All the following statements concerning wills are correct EXCEPT:

A. Once a person is named as an executor in a will, he or she is required to serve.

B. A codicil is a valid modification of a will.

C. A testator may lose the capacity to revoke a will prior to death.

D. In most states a surviving spouse can elect against a will that completely disinherits him or her.

Which of the following statements concerning a power of appointment is (are) correct?

-

A power of appointment can be designed to restrict the donee's right to appoint the property in favor of a specific class of recipients.

-

A power of appointment can be designed to restrict the time period during which the donee may exercise the power.

A.

Neither 1 nor 2

B.

2 only

C.

Both 1 and 2

D.

1 only

All the following trust provisions avoid causing the inclusion of an irrevocable life insurance trust in an insured's gross estate EXCEPT

A. a trust beneficiary's power to withdraw contributions to the trust

B. a trustee's power to loan assets to the estate at the trustee's discretion

C. a trustee's power to pay estate expenses

D. a trustee's power to purchase assets from the estate at the trustee's discretion

Which of the following statements concerning the federal income taxation of estates is (are) correct?

1.

An estate is entitled to a personal exemption of $300 and a standard deduction.

2.

An estate is entitled to a tax deduction for amounts of income distributed.

A. 2 only

B. Both 1 and 2

C. 1 only

D. Neither 1 nor 2

All the following statements concerning a federal estate tax deduction for a bequest or gift to a qualified charity are correct EXCEPT:

A. The amount of a charitable deduction may not exceed 50 percent of a decedent's adjusted gross estate.

B. An estate may deduct the value of the remainder interest in a charitable remainder trust.

C. A life insurance policy that was assigned to a charity as a gift less than 3 years prior to the insured's death qualifies for a charitable deduction.

D. The amount of a charitable deduction is reduced by any taxes and administrative expenses chargeable against the bequest.

All the following statements concerning real property ownership by married couples as joint tenants with right of survivorship are correct EXCEPT:

A. The deceased spouse's interest in the property qualifies for the marital deduction since it passes outright to the surviving spouse.

B. In common-law states the total value of the property receives a stepped-up tax basis in the estate of the first spouse to die.

C. Jointly held property between spouses does not pass through the probate estate of the first spouse to die.

D. All benefits of ownership remain available to the surviving spouse without interruption during the administration of the deceased spouse's estate.

The federal gift tax is

A. a tax on the right of the donee to receive the property

B. levied directly on the gift

C. a flat tax based on gifts made in any taxable year

D. a tax on the right of the donor to make the gift

Alan, a widower, is a retired executive with substantial assets. He wishes to provide for the financial security of his two grandchildren since their father, Alan's son, has always managed money poorly. This year Alan would like to provide each grandchild with a substantial gift. Which of the following statements concerning the impact of the generation-skipping transfer tax (GSTT) on these transfers is correct?

A. A direct gift of $1.5 million to each grandchild made during Alan's lifetime is exempt from GSTT.

B. Any GSTT applicable to the gifts is imposed at a marginal rate based on Alan's wealth.

C. Federal estate or gift tax will also be imposed on the gifts that are subject to the GSTT.

D. Alan could avoid all GSTT by holding all his property until death and providing direct bequests for the grandchildren in his will.