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American College Fundamentals of Estate Planning test Sample Questions:

1. Which of the following statements concerning ownership of property under a tenancy by the entirety is correct?

A) One tenant can freely transfer his or her property interest to a third person.
B) The property will be in the probate estate of the first joint tenant to die.
C) It is a form of property ownership available only to married persons.
D) It is a form of property ownership that applies only to personal property.

2. All the following statements concerning a power of appointment are correct EXCEPT:

A) The possible recipients of property after the exercise of a power of appointment depend on the terms of the power.
B) The appointee of a power of appointment is the party who exercises the power.
C) Failure to exercise a power of appointment is known as a lapse of the power.
D) Thedonee of a power of appointment might be restricted with respect to the time the power can be exercised.

3. All the following transfers are subject to the generation-skipping transfer tax (GSTT) EXCEPT:

A) A distribution to a grandchild from a sprinkle trust created by a grandparent to benefit both skip and non-skip beneficiaries.
B) A termination of a trust at the death of thenonskip life income beneficiary with the remainder distributed solely to skip persons.
C) A direct cash payment of $28,000 from a grandparent to a private prep school to cover the tuition costs for her grandchild.
D) A direct cash gift of $50,000 from a grandparent to his grandchild if such grandchild's parents are still alive.

4. All the following items of property will be included in a decedent's gross estate for federal estate tax purposes EXCEPT

A) the value of a gratuitous lifetime transfer in which the decedent retained a reversionary interest on the date of death worth more than 5 percent of the value of the property and which thedonee must survive the decedent to possess
B) the value of a gratuitous lifetime transfer in which the decedent retained the right for life to receive the income from the property
C) the value of property subject to a general power of appointment that the decedent possessed at death
D) the value of all gratuitous lifetime transfers of property made within 3 years of death

5. Many trust instruments provide for the removal of the original trustee. Valid reasons for removing the original trustee include which of the following?
1.A shift in trust situs is desirable because of changes in law.
2.The beneficiary has moved his or her residence to a distant state.

A) Neither 1 nor 2
B) 2 only
C) 1 only
D) Both 1 and 2

Solutions: