CFP

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Liquidity, Powers of Appointment, and Trusts - Sample Questions 1 - 4

1. Which of the following are potential expenses, taxes or debts that a family or executor should expect with the death of a close family member?

I. Funeral costs
II. Debts owed to creditors
III. Estate tax
IV. Attorney's fees

A) I and II only
B)
I, II and IV only
C)
III and IV only
D) I, II, III and IV
2. All of the following are effective estate tax minimization, avoidance or preparation techniques EXCEPT:

A) ILIT
B)
Revocable trusts
C)
Pre-death annual gifting
D)
CRAT/CRUT

3. Which of the following are benefits of using life insurance as an estate planning tool?

I.Life insurance premiums are listed as an estate tax credit on Form 709
II. Proceeds are exempt from federal income tax
III. Insurance can be excluded from the gross estate
IV. Proceeds are available within a couple of weeks

A) I and II only
B)
I, II and IV only
C)
II, III and IV only
D) All of the above

4. In order to preserve the family nature of a closely-held business at the death of one of the key persons, the IRS has established favorable tax treatment for such business entities. For qualified estates, the estate tax payments can be made over an installment period if the business qualifies under which section of the IRC?

A) Section 6166
B)
Section 2504
C)
Section 905
D) Section 1244

Sample Questions 5 - 8

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