FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 25: Transfer Taxes and Wealth Planning of the Cfa Institute

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following is a true statement?

A) A fiduciary entity is a legal entity that takes possession of property for the benefit of a person.
B) An estate is a fiduciary that comes into existence upon a person's death to transfer the decedent's real and personal property.
C) A trust is also a fiduciary whose purpose is to hold and administer the corpus for other persons (beneficiaries) .
D) An estate exists only temporarily, but a trust may have a prolonged or even indefinite existence.
E) All of these are true.

F) D) and E)
G) None of the above

Correct Answer

verified

Show Answer

Question 32

Essay

Review LaterAdd Note

Review Later

This year Maria transferred $600,000 to an irrevocable trust that pays equal shares of income annually to four cousins (or their estates) for the next eight years. At that time, the trust is terminated and the corpus of the trust reverts to Maria. Determine the amount, if any, of the current gifts and the taxable gifts if the relevant interest rate is 6 percent and Maria is married and elects to gift-split with her spouse.

Correct Answer

verified

$55,771 fo...

View Answer

Show Answer

Question 33

Multiple Choice

Review LaterAdd Note

A unified credit is subtracted in calculating both the gift tax and the estate tax. Why doesn't this calculation have the effect of increasing the total unified credit amount?

The annual exclusion applies to cumulative gifts made to each donee over the course of the year.

The unified credit is designed to allow a minimum amount of lifetime transfers without triggering the imposition of a transfer tax.

Tracey is unmarried and owns $7 million in stock and bonds. What is the result if Tracey dies this year and leaves all of her property to a qualified charity?

A fiduciary is a legal entity that can only exist for a year.

For 2014, the exemption equivalent for the estate tax is $5.34 million.

The estate tax is imposed on testamentary transfers.

Which of the following statements is(are) true for both gratuitous and testamentary transfers?

This year Samantha gave each of her three nephews birthday gifts of $10,000 in cash. At Christmas, Samantha gave each of her three nephews Christmas gifts of an additional $5,000 in cash. What is the amount of the taxable gifts, if any, made by Samantha this year?

The probate estate will include the total value of all real property owned by the decedent at the time of death regardless of whether the decedent co-owned the property as tenants in common or as joint tenants with the right of survivorship.

A bypass provision in a will requires a decedent to have a taxable estate in order to use a unified credit to reduce total estate taxes on a married couple.

Both spouses must consent to any gift-splitting election.

Which of the following is a true statement?

At his death in 2014 Nathan owned the following property: $\begin{array}{c}\begin{array}{lll}\frac{\text { Description}}\\\\\text{Real estate}\\\text{Cash, stock, and bonds}\\\text{Personal property}\\\end{array}\begin{array}{lll}&\end{array}\begin{array}{lll}\frac{\text { Value }}\\\\{\$ 5,000,000} \\10,500,000 \\200,000\\\end{array}\end{array}$ The real estate is subject to a $1,700,000 mortgage and Nathan made taxable gifts in 2009 totaling $2 million at which time he offset the gift tax with a unified credit (exemption equivalent of $2 million). Nathan has never been married. What is the amount of his estate tax due?

No deductions are allowed when calculating the taxable estate.

At her death Tricia had an adjusted gross estate consisting of $8 million of property. Which of the following is a true statement about Tricia's estate or estate tax?

This year Nicholas earned $500,000 and used it to purchase land in joint tenancy with a right of survivorship with Nevaeh. Has Nicholas made a taxable gift to Nevaeh and, if so, in what amount?

The gift-splitting election only applies to gifts made by taxpayers who reside in community property states.