CANNON CTFA PREP COR RECTLY

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CANNON CTFA PREP COR RECTLY

SOLVED

Question : Jean and John Simmons are married and own

their own home as tenants by entirety. When John dies the home is valued at $350,000. How much will be counted in his gross taxable estate?

• None, as it passes directly to his spouse, Jean.
• $175,000 - or one-half of the value
• $225,000 - or the full amount minus the $125,000 one-

time exclusion for capital gains on a person residence.

• $350,000 - the full amount is includable.

CORRECT ANSWER : B. $175,000 - or one-half the

value

Question : Once a will is properly drafted it is valid:

• in all states.
• for the state for which it was prepared.
• in all states for a period of 5 years.
• for the state for which it was prepared for a period of 5

years.

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CORRECT ANSWER : B. for the state for which it was

prepared.

Question : In managing personal trust assets, a trustee

should seek which of the following?

• maximum income
• preservation of capital
• reasonable income and preservation of capital,

including purchasing power

• maximum income and reasonable preservation of

capital

CORRECT ANSWER : C. reasonable income and

preservation of capital including purchasing power

Question : A decedent's estate being settled by your bank

contains an antique automobile. One of the directors of your bank indicates that he would like to buy it. You should do which of the following?

• Sell it to him at a bargain price and befriend him.

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• Have a qualified appraisal done and offer it to him at

that value.

• Explain that he may not purchase the car from the

estate.

• Arrange for a public auction at which he may buy it if

he is the highest bidder.

CORRECT ANSWER : C. Explain that he may not

purchase the car from the estate.

Question : If you hold a rental property in an irrevocable

trust, when is it all right to rent to an employee of your trust department?

• Never
• When the employee pays fair rent.
• When the employee has been with you at least 5 years

and can be trusted.

• When the employee has no connection with the

account or beneficiaries.

CORRECT ANSWER : A. Never

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Question : Which of the following generally may NOT

hold real property?

• Revocable Living Trusts trusteed by a corporate

fiduciary.

• Uniform Gift to Minors Account
• 2503(c) Minors Trust
• Uniform Transfer to Minors Account

CORRECT ANSWER : B. Uniform Gifts to Minors

Account

Question : H's will provides that upon his death, $1

million will be held in a trust for the benefit of his wife,

• This trust provides that W will receive all of the trust

income and will receive distributions of principal int he form of an annuity for her lifetime. At W's death, the remaining trust assets will be distributed to a designated charity. H's executor intends to make a "QTIP" election for this trust. Will the legacy to the trust, or any part thereof, be deductible by H's estate, or if so, why?

• Yes, the entire $1 million will qualify for the estate tax

marital and charitable deductions.