CFP

AAA

Liquidity, Powers of Appointment, and Trusts - Sample Questions 5 - 8

5. Which of the following is/are characteristics of a "general power of appointment?"

I. Property is not included in the decedent's gross estate.
II. No conditions or restrictions.
III. Property may not be appointed to the decedent's creditors.
IV. Holder of the power can transfer property to themselves.

A) I and II only
B) I and III only
C) II and IV only
D) III and IV only


6. Ashley is the income beneficiary of a trust whereas she is entitled to the 5-and-5 powers. She died in 2013 without exercising her power for the year. The trust value was $750,000. What is included in Ashley's gross estate?

A) $0
B) $37,500
C) $87,500
D) $750,000


7. All of the following are acceptable reasons for trust funds to be paid for the benefit of the trust beneficiary under the "ascertainable standard" EXCEPT:

A) Payment to the University of Miami for college tuition of the beneficiary.
B) Payment of asthma medication.
C) Cost of a drug addiction program.
D) Payment of credit card debt used to buy an engagement ring.


8. Harold Harrington gave his son (Bruce) a general power of appointment over his trust assets. Which of the following are true statements regarding Bruce and his power?

I. Bruce can only appoint funds using an ascertainable standard.
II. Bruce can use the funds to buy a car for his father.
III. Bruce can use the funds to pay his father's creditors.
IV. If Bruce dies before his father, the assets would be included in the gross estate of his father.

A) I only
B) I and IV only
C) II and III only
D) II, III and IV only

Sample Questions 9 - 14
comments powered by Disqus
Related Articles
  1. Six Things Bad Financial Advisors Do
    Investing Basics

    Six Things Bad Financial Advisors Do

  2. Fee-Only Financial Advisers: What You ...
    Investing Basics

    Fee-Only Financial Advisers: What You ...

  3. It Is Not Too Late To Hedge Against ...
    Stock Analysis

    It Is Not Too Late To Hedge Against ...

  4. Another Sound Lesson In Risk Management
    Investing News

    Another Sound Lesson In Risk Management

  5. 10 Characteristics of Successful Entrepreneurs
    Entrepreneurship

    10 Characteristics of Successful Entrepreneurs

Trading Center