CFP Estate Planning Practice Test

These questions are part of the practice quiz. Start practicing

• Where are funeral tax expenses reported for deductions?
• What component requires careful structuring in a buy-sell agreement?
• What is a Self-Canceling Installment Note (SCIN) primarily used for?
• Which property ownership method involves a right of survivorship?
• When is it advisable to execute a durable power of attorney?
• What occurs to property when one joint tenant dies?
• What is the outcome of not including life insurance proceeds in the gross estate?
• Which of the following aspects does NOT characterize community property?
• What characteristics do CRATs and CRUTs share?
• What tax benefit may a purchaser receive in an installment sale of property?
• What discounts may a Family Limited Partnership qualify for regarding gift tax?
• What defines a skip person among nonlineal descendants in terms of age relationship to the transferor?
• Which type of estate deduction occurs under specific conditions prior to calculating the gross estate?
• What is the impact of transferring limited partnership interests over time to donees?
• How is the next trading price after a person's death determined?
• In estate planning, what does the term 'ancillary probate' refer to?
• How is the Annual Exclusion applied in relation to marital deductions when gifting to a spouse?
• What is the status of cash donations to a church concerning Gift Taxation?
• Under Section 6166, what happens if heirs dispose of a closely-held business interest?
• How is gift tax allocated to the recipient's basis calculated?
• Which transactions are subject to the Generation-Skipping Transfer Tax (GSTT)?
• What qualifies a Marital Power of Appointment for the marital deduction?
• What occurs if a will attempts to disinherit a spouse or minor child?
• Which scenario does NOT create a taxable gain in a bargain sale?
• How must a waiver of Qualified Pre-Retirement Survivor Annuity benefits be executed?
• When might it be beneficial to gift property that has declined in value?
• Which of the following assets is NOT included in the decedent's gross estate if transferred to an ILIT more than three years prior to death?
• When property is appreciated as of the date of the gift, what happens to the donor's adjusted basis?
• What happens to assets acquired before marriage in a community property system?
• In estate planning, what does having incidents of ownership in a life insurance policy lead to?
• What is the Double Basis Rule concerning the fair market value (FMV) of gifted property?
• What does a buy-sell agreement mitigate for estate planning?
• In a guardianship, who provides the guardian?
• Who typically is not eligible to inherit under intestate laws if there is no will?
• What is the tax consequence if the grantor revokes a trust?
• How are liabilities treated in regard to the determination of the gross estate?
• What is true about a Partnership Entity Buy-Sell Agreement?
• What is the tax consequence for trust assets upon the death of the grantor of a revocable trust?
• What is a Totten trust primarily used for?
• Which of the following best describes how the gain basis is handled if property has depreciated?
• When is GSTT levied?
• What percentage of the value of a decedent's estate must a closely held business exceed to qualify for certain estate tax payment provisions?
• How is a gift of $45,000 to a spouse affected by the Annual Exclusion of $12,000?
• When a beneficiary inherits property that the decedent acquired through a gift within one year of death, what basis does the beneficiary take?
• What is a primary purpose of a Qualified Personal Residence Trust (QPRT)?
• What is one feature of revocable trusts regarding probate?
• Form 706, pertaining to estate tax, is due how many months after the death of the decedent if no extension is filed?
• Which of the following arrangements is NOT plausible for dealing with unanticipated incapacity?
• What is included in the gross estate concerning gifts made within three years of death?
• If property has appreciated as of the date of the gift, how is the gift tax paid by the donor treated?
• Which types of property are generally included in the probate estate?
• What is a significant limitation of pooled income funds?
• Which type of property is included in the gross estate of the first spouse to die under joint tenancy?
• How is the value of a gift of stock determined if the market is closed?
• What is a reasonable cause for an extension of time to pay estate tax?
• What is the status of amounts paid in gift taxes on gifts made shortly before death?
• When is a Gift Tax Return due?
• In the net gift technique, what does the donee agree to do?
• What does IRC Section 2032 provide guidance on?
• What is typically a characteristic of a revocable trust?
• What basis does a donee have for gifts received?
• If a corporation is designated as the owner and irrevocable beneficiary of a life insurance policy, what happens to the death benefit?
• What happens to the status of a trust if it is revocable at creation?
• Why is the early payment of estate taxes mentioned in relation to closely held businesses?
• What happens if a parent dies before their child, according to the Predeceased Parent Rule for GSTT?
• What is the implication of the joint tenancy when it comes to a deceased tenant's Will?
• What defines an incomplete gift in estate planning?
• Where is the expense of filing the fiduciary income tax return deducted?
• What is defined as intestate probate?
• Which property ownership arrangement is recognized solely between spouses?
• What is true regarding gifts of life insurance?
• What expenses are deductible from the gross estate?
• Which of the following statements about bypass trusts is true?
• When is imputed interest not applicable on a loan under $100,000?
• What deductions apply to the Adjusted Gross Estate?
• Which of the following is considered a pitfall of an estate plan?
• What limitation applies to the use of a GRAT regarding gift taxes?
• What is the maximum lifetime exemption against Generation-Skipping Transfer Tax (GSTT)?
• What does IRC Section 6166 allow an estate to do?
• What happens to the participating spouse's exclusion amount in a standard AB trust?
• What happens if a donee dies more than one year after receiving a gift?
• What type of trust is eligible for the annual exclusion for transfers?
• What does the term residual estate typically refer to in estate planning?
• What is the role of a revocable living trust in estate planning?
• What happens to the present value of a self-canceling installment note at the seller's death?
• What happens to the clarity of title to property when the probate process is used?
• What is the typical maximum amount exempt from imputed interest for loans?
• What constitutes a Qualified Transfer (QT)?
• In a CRAT or CRUT, who is able to manage the assets?
• What does a Charitable Lead Annuity Trust (CLAT) provide?
• How are gifts typically valued for tax purposes?
• Which of the following is an excellent non-probate transfer device?
• For a nonresident noncitizen surviving spouse, what must be established to qualify for the marital deduction?
• What happens to the death benefit from a life insurance policy used to fund a buy-sell agreement?
• What impact do prior taxable gifts have on the taxable estate?
• What does the term "Pass Through Probate" imply?
• For what purposes might a general power of appointment be advantageous regarding gross estate?
• What is the primary purpose of Totten trusts?
• In trust management, who is responsible for paying taxes on income generated from the trust?
• What is true about imputed interest between a lender and borrower?
• Which is a requirement for income from a QDOT?
• What does an extension of time for filing a gift tax return not affect?
• For a properly structured buy-sell agreement, what is established for taxation purposes at the date of death?
• How are gains and losses treated when the fair market value of a gift exceeds its adjusted basis?
• What is a characteristic of community property?
• How does the basis adjustment work for community property upon the death of a decedent?
• For which type of property is an installment sale particularly advantageous?
• What does the Generation Skipping Transfer Tax (GSTT) apply to?
• What type of property is included in the probate estate?
• What basis adjustment occurs for inherited JTWROS property at the date of death?
• What form is used for making an Election for Alternative Valuation Date?
• What happens to gifts made more than three years prior with no gift tax paid?
• When one owns a life insurance policy on themselves, how is the insurance proceeds treated for estate purposes?
• In a buy-sell agreement with more than two partners, what is expected of the surviving partners?
• What can the probate process result in?
• When is no gain or loss recognized during the sale of a gift?
• Which of the following correctly describes the treatment of gift tax paid on appreciated property?
• What is the basis for autos when transferred?
• What happens to dividends declared after the death of the decedent?
• What is a primary benefit of designating a beneficiary for life insurance policies?
• What determines whether something passes through probate or avoids it?
• What benefit does the grantor of a Charitable Remainder Unitrust (CRUT) receive?
• Which statement is true regarding the basis of gifted property?
• What is a QDOT?
• Which gifts are included in the gross estate?
• Which of the following is subject to gift tax?
• What is a Qualified Pre-Retirement Survivor Annuity (QPSA)?
• According to JTWROS regulations, which rule applies when determining the inclusion of property in a decedent's gross estate?
• Assets intended for charity upon death are treated in which way concerning the gross estate?
• Regarding gross gifts versus taxable gifts, what rule applies when a loan is less than $10,000?
• What occurs in the gross estate for gifts made after 1976?
• What must be included for tax purposes when property is held as JTWROS?
• What was the estate tax credit (exemption equivalent) unified with for the year 2011?
• What occurs to the basis of gifted property when the fair market value is lower than the donor's adjusted basis at the date of the gift?
• If an individual's taxable estate is zero, what does this indicate about their estate credit use?
• What is a critical aspect of joint tenancies for property ownership?
• What result is there for the residence in a Totten trust if the grantor survives the trust term?
• What aspect of revocable trusts is NOT a benefit?
• What is a defining feature of a pooled income fund?
• Which type of appointment causes property to be included in the gross estate?
• What is the annual exclusion amount per recipient for gifting when both spouses elect gift splitting?
• What is the gross estate based on?
• What describes a Family Limited Partnership?
• When must an estate tax return be filed?
• When a named beneficiary of an insurance policy gifts the proceeds to another person, who is liable for the gift tax?
• What was the 2011 gift tax exclusion amount for individuals?
• In a bargain sale, how is the taxable gain calculated for the seller?
• Charitable gifts are considered what on the Gift Tax Return?
• What is true regarding the treatment of real estate in a gross estate?
• What should a person diagnosed with a terminal illness consider before gifting assets?
• What rule applies when property has depreciated at the time of a gift?
• The general power of appointment over property loses its "general" status when it is exercisable for what purposes?
• Why are GRATs not eligible for the annual exclusion?
• How long after the death of the decedent can the alternate valuation date be elected?
• Which of the following results from selling a gift for less than its fair market value?
• What must spouses do when giving a joint gift using the split-gift technique?
• What must a trust do in order to be subject to gift tax?
• What is included in the gross estate regarding notes receivable at the death of a decedent?
• What is the proper order of the estate planning process?
• Which trusts are exempted from GSTT?
• Which estate planning tool includes provisions for both health care and financial decisions?
• What is the purpose of POD accounts and revocable living trusts?
• Who typically pays taxes on the residual estate?
• How is a note receivable treated at the death of a decedent?
• According to the Terminal Interest Rule, what must occur for property to be qualified?
• What event triggers a taxable gift according to trust regulations?
• What occurs when the fair market value exceeds the donor's adjusted basis at the time of a gift?
• What is a common feature of Tenancy by the Entirety?
• When is the full market value of property considered in gross income?
• What was the gift splitting limit for a married couple in 2011?
• What type of trust gift is a gift of a remainder interest?
• What is the maximum number of shareholders allowed for an S Corporation to qualify for Section 6166?
• Are penalties ever deductible under administrative expenses?
• What is the primary function of the CRAT or CRUT structures?
• In estate planning, which group of people typically needs estate planning?
• What is a general power of appointment?
• What happens to the basis of an asset if it is gifted?
• Are the proceeds of a life insurance policy payable to the decedent's estate included in the gross estate?
• What is a distinguishing feature of a QPRT in relation to gift tax exclusions?
• In gift splitting, what is the limit per recipient for a married couple?
• What characterizes a cross-purchase buy-sell agreement?
• In which type of property state does the marital deduction apply?
• What is the basis for depreciation of a business gift?
• What is a key feature of joint tenancy regarding property interest?
• A transfer to which account will NOT result in a future interest gift for tax purposes?
• What is required for the property to qualify for Special Use Valuation regarding usage?
• What is the tax implication of the present value of a life estate gift?
• Which type of gifts is subject to the three-year adback rule for gross estate?
• How are "wasting assets" valued at the time of death?
• If a grantor of a GRAT dies during the trust term, what happens to the trust's value?
• How are proceeds from life insurance treated if transferred within five years of a decedent's death?
• Which of the following statements is true about the expenses of filing an estate's fiduciary income tax return?
• What is an important factor to consider when using a net gift technique?
• What tax treatment applies to the full market value of an incomplete gift?
• What is the impact on the gross estate if the insured can borrow against their life insurance policy?
• What must be true for community property states' modified rules regarding joint property?
• What happens to the trust assets if the grantor survives the trust term?
• What do intestacy laws dictate regarding a deceased's property?
• What is required for a disclaimer of interest to be valid?
• Which of the following is true about gross estate valuations?
• What is the implication of having ownership or borrowing rights in a life insurance policy upon the decedent's death?
• What percentage of the decedent's gross estate must property represent to qualify for Special Use Valuation?
• In a standard AB trust, what happens to the current exclusion amount for the participating spouse?