1. All of the following are characteristics or true statements pertaining to an "inter-vivos " revocable trust EXCEPT:

A) The trust can be modified at any time while the grantor is alive.
B)
The grantor can claim all income from the trust on their individual Form 1040.
C)
This is a good trust for probate avoidance.
D) This is a good trust for asset protection.

2. Which of the following are characteristics of a Simple Trust?

(1) Corpus can be distributed to the beneficiary.
(2) Beneficiaries can be charitable.
(3) Capital gains are considered as part of the corpus.
(4) Income is taxable to the recipient even if left in the trust to accumulate.
(5) Trust is given a deduction for income paid out to a beneficiary.

A) 1, 2 and 3 only
B)
2, 3 and 4 only
C)
3 and 4 only
D) 3, 4 and 5 only

3. All of the following are TRUE statements concerning Trust and Estate Taxation EXCEPT:

A) The maximum estate tax rate is 45%.
B)
Trust income above $11,950 is taxed at 39.6%.
C)
Trusts must file Form 1041 in years where the trust income is $600 or more.
D) The estate tax exclusion amount is $5,250,000 in 2013.

4. Lester (divorced, age 75), has a traditional IRA with a local bank account worth $500,000. In September of this year, he died and named his daughter Jennifer as the beneficiary of his IRA. Before Jennifer had a chance to convert the IRA into an Inherited IRA, it automatically paid out Lester's required minimum distribution for the year. This check would be best described as:

A) Return of principal
B)
Tax free earnings paid to a beneficiary
C)
Income in respect of a decedent
D) Section 179 income inadvertently paid to a survivor

5. All of the following are good reasons to establish an Irrevocable Trust EXCEPT:

A) Ownership of Life Insurance
B)
Maintain control of assets
C)
Asset protection
D) Charitable gift planning

 

Answer Key

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