Real Estate Planning - Chapter 10

19 Questions | Total Attempts: 100

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Real Estate Quizzes & Trivia

Questions and Answers
  • 1. 
    When a U.S. citizen dies and bequeaths property to his U.S. citizen spouse, the marital deductions is limited to the following amount:
    • A. 

      $0

    • B. 

      $1,360,800

    • C. 

      $5,340,000

    • D. 

      The marital deduction is unlimited.

  • 2. 
    Jeremy and Rosa were married forty years ago after meeting on the beaches of Cozumel.  Rosa moved to the U.S. with Jeremy, but she never applied for U.S. citizenship.  If Jeremy is concerned about using the marital deduction for the fair market value of the property he bequeaths to Rosa, which of the following techniques could he use?
    • A. 

      Qualified Terminable Interest Trust (QTIP)

    • B. 

      Section 2503(b) Trust

    • C. 

      Section 2503(c) Trust

    • D. 

      Qualified Domestic Trust (QDOT)

  • 3. 
    When a U.S. citizen married to a resident alien dies, what is the maximum value of a specific, outright bequest of property that can qualify for the unlimited marital deduction?
    • A. 

      $0

    • B. 

      $1,360,800

    • C. 

      $5,340,000

    • D. 

      The marital deduction is unlimited.

  • 4. 
    An executor may elect the unlimited marital deduction for which of the following transfers?1) Decedent's will directs the creation of a CRAT and the decedent's nonresident alien spouse is the income beneficiary.  The trustee of the CRAT is a citizen of the United Kingdom.2) Bequest to U.S. citizen spouse of the right to use property for the remainder of her life.  Executor has elected QTIP on the property.3) A payment of $650,000 to fulfill a specific bequest to decedent's U.S. citizen spouse.  Decedent's spouse became a U.S. citizen two months before the filing of the decedent's estate tax return.4) A payment of $250,000 to fulfill a specific bequest to a decedent's resident alien spouse.
    • A. 

      2 only

    • B. 

      2 and 3

    • C. 

      3 and 4

    • D. 

      1,2,and 3

  • 5. 
    Juan's will creates a General Power of Appointment Trust (GPOA Trust) that distributes income to his wife annually for life and gives his wife a general power of appointment over the assets in the trust.  Which of the following statements concerning a GPOA Trust is correct?
    • A. 

      The GPOA Trust only qualifies for the unlimited marital deduction if the trustee agrees to make distributions of principal to Juan's wife.

    • B. 

      The unlimited marital deduction cannot be elected over the property transferred to the trust because Juan's wife cannot appoint assets to herself, her creditors, or to anyone on her behalf.

    • C. 

      The unlimited marital deduction is not available because Juan's wife does not have the current right to the assets in the trust.

    • D. 

      The GPOA Trust automatically qualifies for the unlimited marital deduction because Juan's wife has a general power of appointment over the trust's assets.

  • 6. 
    If a decedent bequeaths the outright ownership of his house to his children subject to his wife's right to live in that house for the remainder of her life, which of the following statements is correct?
    • A. 

      If the wife disclaims her interest in the house, the house is not included in the decedent's taxable estate.

    • B. 

      If the children disclaim their interest in the house, the house will automatically transfer to the decedent's spouse as the life estate beneficiary.

    • C. 

      If the decedent's wife is a resident alien of the U.S., a QTIP election over the property will allow a marital deduction equal to the fair market value of the property.

    • D. 

      If the executor makes a QTIP election on the house the house is not included in the decedent's taxable estate.

  • 7. 
    Which of the following is not a benefit of the unlimited marital deduction?
    • A. 

      The estate tax on property can be deferred until the death of the second to die spouse.

    • B. 

      The unlimited marital deduction can fund the applicable estate tax credit of the surviving spouse.

    • C. 

      The use of the unlimited marital deduction can shelter the future appreciation of an asset from estate taxes at the death of the second to die spouse.

    • D. 

      The unlimited marital deduction can ensure the surviving spouse has sufficient assets to support her lifestyle.

  • 8. 
    Of Pablo's $10,000,000 federal gross estate, his will includes one specific bequest of $7,500,000 to his wife, Ariana, and directs the debts and other expenses of $1,000,000 to be payable from the residuary of the estate.  The residuary heirs are Pablo's children.  What is the amount of the marital deduction included on Pablo's federal estate tax return?
    • A. 

      $0

    • B. 

      $6,500,000

    • C. 

      $8,500,000

    • D. 

      $7,500,000

  • 9. 
    Given only the following information, which would qualify for the estate tax unlimited marital deduction?
    • A. 

      Property transferring to a surviving spouse as beneficiary of an irrevocable trust created six years ago. At the time of the trust's creation, the gift was complete, but the decedent did not pay any gift tax as the only beneficiary of the trust was the decedent's spouse.

    • B. 

      A bequest of 2,000 shares of Holiday Incorporated stock to a surviving spouse. The surviving spouse is a U.S. citizen.

    • C. 

      The bequest of the life estate interest in a home to the surviving spouse. The decedent bequeathed the remainder interest to his children.

    • D. 

      A bequest of property with a fair market value of $10,000 to a surviving spouse. The surviving spouse disclaims the interest and the property transfers to the decedent's residual heirs, his children.

  • 10. 
    Jeff died in the current year.  He had inherited the following property from his wife in 1999: AssetFMV @ Wife's DeathFMV @ Jeff's DeathLife estate in home$ 240,000$600,000Cash$ 450,000$250,0001991 Chevrolet$14,000Sold in 2000IRA$380,000$500,000Considering only the property listed above, what is the value of the property included in Jeff's gross estate?
    • A. 

      $250,000

    • B. 

      $704,000

    • C. 

      $750,000

    • D. 

      $1,350,000

  • 11. 
    Which of the following property interests qualifies for the unlimited marital deductions?
    • A. 

      John dies and leaves his vacation home to his wife as trustee of a testamentary trust created for the sole benefit of his two children.

    • B. 

      The executor of John's estate made the QTIP election for the bequest of a life estate interest in his personal residence to Deborah, John's wife.

    • C. 

      John bequeaths his interest in community property to his wife subject ot his wife surviving him by more than 8 months.

    • D. 

      At John's death, his will created a trust for the benefit of his wife. The trust document gives his wife the authority to appoint assets to herself, her creditors, and her heirs with the approval of John's brother, Colin.

  • 12. 
    Which of the following is not a requirement for a GPOA Trust to be eligible for the unlimited marital deduction?
    • A. 

      No person, other than the surviving spouse, may appoint any part of the trust property to anyone other than the surviving spouse.

    • B. 

      The general power of appointment granted to the surviving spouse must be exercisable by the surviving spouse alone.

    • C. 

      The surviving spouse's right to the trust property must be limited to an ascertainable standard, such as health, education, maintenance, and support.

    • D. 

      The surviving spouse must be entitled to receive all of the income from the trust, at least annually.

  • 13. 
    Which of the following statements is true?
    • A. 

      An estate is described as overqualified when, due to a failure to make proper use of the marital deduction, too much of the property is subject to estate tax at the death of the first spouse.

    • B. 

      An estate is described as underqualified when, due to a failure to make proper use of the marital deduction, not enough property is subject to estate tax at the death of the first spouse.

    • C. 

      A bypass trust aids in guaranteeing the full use of an individual's applicable estate tax credit.

    • D. 

      An estate that does not take advantage of its available applicable estate tax credit is transferring assets at the lowest possible cost.

  • 14. 
    Which of the following statements regarding bypass trusts is false?
    • A. 

      A bypass trust can give the surviving spouse the right to distributions of principal for an ascertainable standard without causing inclusion of the trust's assets in the surviving spouse's gross estate.

    • B. 

      A surviving spouse can demand the greater of $5,000 or 5% of the trust's principal each year without causing inclusion of the trust's assets in her gross estate.

    • C. 

      Distributions of trust income to the surviving spouse will not create an ownership interest in the trust's assets.

    • D. 

      The right to appoint the assets of the trust to herself, her creditors, or anyone she desires will not create an interest which will cause inclusion of the trust's assets in the surviving spouse's gross estate.

  • 15. 
    Jimmy and Rebecca have been married for 35 years.  Jimmy had a net worth of $8MM when he died in 2014.  Which of the following scenarios would incur the lowest overall (at Jimmy's death and Rebecca's death) estate taxes assuming the property transfers at equal value at the death of both individuals and utilizing 2014 estate tax rates?  Assume that portability is not elected.
    • A. 

      Jimmy's will directs that all of his property is transferred to Rebecca.

    • B. 

      In his will, Jimmy funds a trust with $5,340,000 for the benefit of his two children. Rebecca will receive an annual income distribution from the trust. All other assets will transfer to Rebecca.

    • C. 

      At Jimmy's death, specific bequests totaling $550,000 are transferred per the direction of the will to individual's other than Rebecca. The remainder of the assets are transferred to a trust with the income payable to Rebecca for her life and the remainder interest payable to the children at Rebecca's death. Jimmy's executor elected to treat this as a QTIP trust.

    • D. 

      Jimmy's will directs the transfer of $1,000,000 to his two children and the remainder of his assets to his wife, Rebecca.

  • 16. 
    Which of the following allows an individual to refuse property from the estate of a decedent?
    • A. 

      Bypass trust

    • B. 

      Exclusionary clause

    • C. 

      Disclaimer

    • D. 

      Rejection

  • 17. 
    Within how many months must an heir file a qualified disclaimer for it to be valid?
    • A. 

      6 months

    • B. 

      9 months

    • C. 

      12 months

    • D. 

      15 months

  • 18. 
    Janice died in 2014.  She had been married to Thomas for 17 years, and the two had amassed a community property estate of $18MM.  Janice's will directs three specific bequests to her mother, brother, and father of $700,000, $450,000, and $200,000, respectively and creates a bypass trust to receive property equal to any remaining applicable estate tax credit available after her specific bequests.  The bypass trust gives Thomas the right to income for his life and the remainder of the trust to her two sons and leaves the residual of the estate to Thomas.  Janice's will directs the residual to be used to pay the estate taxes.  What is the marital deduction on Janice's federal estate tax return.
    • A. 

      $7,650,000

    • B. 

      $3,660,000

    • C. 

      $3,750,000

    • D. 

      $5,340,000

  • 19. 
    Which one do you like?
    • A. 

      Option 1

    • B. 

      Option 2

    • C. 

      Option 3

    • D. 

      Option 4

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