Question

Which is an example of a Qualified Terminable Interest Property (QTIP) property?

Question 5 options:

	A life insurance policy with a one-time lump sum payment to the surviving spouse
	An automobile
	A homestead
	A trust with a life interest to the surviving spouse and remainder to the children

Question 6 (2 points)

Which is NOT a way in which an estate planner can use trusts to benefit family members?

Question 6 options:

	Identify the estate assets and the beneficiaries who are to receive them.
	Diminish problems such as will contests.
	Reduce federal and state death taxes.
	Avoid probate.

Question 7 (2 points)

To qualify for the charitable deduction, a gift cannot be made to a(n):

Question 7 options:

	Private school
	Religious charity
	Individual
	Library

Question 8 (2 points)

Which is NOT a major type of life insurance?

Question 8 options:

	Universal life insurance
	Whole life insurance
	Term life insurance
	Custodial life insurance

Question 9 (2 points)

Which is NOT a potentially adverse factor that could diminish any estate?

Question 9 options:

	Administration expenses
	Trusts that transfer property after the deaths of both spouses
	Forced liquidation
	Termination of employment

Question 10 (2 points)

Which is NOT a common method of reducing the gross estate?

Question 10 options:

	Life insurance
	Trusts that do not avoid multiple taxation
	Gifts made during the donor’s lifetime
	Special power of appointment

Answer 1

Q.5 Which is an example of a Qualified Terminable Interest Property (QTIP) property?

Answer: A trust with a life interest to the surviving spouse and remainder to the children

A life insurance policy with a one-time lump sum payment to the surviving spouse

Incorrect. A QTIP property must provide income for life.

An automobile

Incorrect. An automobile will depreciate in value and provide no income.

A homestead

Incorrect. A homestead does not provide income.

A trust with a life interest to the surviving spouse and remainder to the children

Correct. The surviving spouse has a qualified income interest for life

Q.6 Which is NOT a way in which an estate planner can use trusts to benefit family members?

Answer: A

A. Identify the estate assets and the beneficiaries who are to receive them

Correct. This is a provision of a will, not a trust.

B. Diminish problems such as will contests

Incorrect. Trusts cannot be contested in court.

C. Reduce federal and state death taxes.

Incorrect. Trusts can be used to increase the marital and charitable deductions.

D. Avoid probate

Incorrect. Wills—not trusts—must be probated

Q.7 To qualify for the charitable deduction, a gift cannot be made to a(n):

Answer: Individual

Private school

Incorrect. The charitable deduction applies to gifts made for educational purposes

Religious charity

Incorrect. The charitable deduction does not discriminate on the basis of religious beliefs of an organization.

Individual

Correct. A charity cannot be an individual.

Librar

Incorrect. Gifts made to provide a literary benefit qualify for this deduction

Q.8 Which is NOT a major type of life insurance?

Answer: Custodial life insurance

Universal life insurance

Incorrect. Universal life insurance covers a specific period and builds the cash value of the policyholder.

Whole life insurance

Incorrect. Whole life insurance combines lifetime protection with a minimum savings feature called cash value

Term life insurance

Incorrect. Term life insurance is pure protection without savings

Custodial life insurance

Correct. Custodial life insurance is not a classification of life insurance.

Q.9 Which is NOT a potentially adverse factor that could diminish any estate?

Answer: Trusts that transfer property after the deaths of both spouses.

Administration expenses

Incorrect. These expenses must be paid from the assets of the decedent’s estate and may substantially lessen its value.

Trusts that transfer property after the deaths of both spouses

Correct. Such trusts are not subject to estate taxes.

Forced liquidation

Incorrect. The personal representative may be forced to sell assets to pay legitimate expenses.

Termination of employment

Incorrect. Such termination creates a substantial loss of income to the estate.

Q.10 Which is NOT a common method of reducing the gross estate?

Answer: Trusts that do not avoid multiple taxation

Life insurance

Incorrect. Life insurance payments can be used to pay debts and expenses

Trusts that do not avoid multiple taxation

Correct. Trusts that avoid multiple taxation or qualify for the marital deduction reduce the estate.

Gifts made during the donor’s lifetime

Incorrect. A gift made before the donor’s death reduces the estate by the value of the gift.

Special power of appointment

Incorrect. This excludes the value of the property appointed for being included in the gross estate of the spouse, who is the beneficiary.