QUESTION: 213

Which of the following statements concerning a testamentary trust is correct?

It saves federal and state death taxes at the death of the grantor.
The assets in the trust are free of probate costs.
It becomes effective only at the death of the grantor.
The trust terms must be included in the will.

Answer(s): C

Mr. Allen died early this year survived by his spouse Mrs. Allen. Among the items of family property are:

1. A $200,000 life insurance policy on Mr. Allen's life with Mrs. Allen designated as beneficiary. Mrs. Allen has been the owner of the policy ever since it was issued 4 years ago.
2. The family residence with a fair market value of $300,000. Mr. and Mrs. Allen own the residence jointly with the right of survivorship even though Mr. Allen purchased it with his separate funds.
3. A $20,000 bank account. Mr. and Mrs. Allen own the account jointly with the right of survivorship even though Mrs. Allen made all the deposits.

What amount of the family property will be included in Mr. Allen's gross estate for federal estate tax purposes?

$350,000
$360,000
$300,000
$160,000

Answer(s): D

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QUESTION: 215

$360,000
$300,000
$160,000
$350,000

Answer(s): C

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QUESTION: 216

Which of the following statements concerning the ownership of real property as joint tenants with right of survivorship is correct?

If the joint tenants are husband and wife, because this is a qualified joint interest, the entire value of the property will be in the estate of the husband regardless of which spouse dies first.
If the joint tenants are brother and sister and the brother contributed all the funds to purchase the property, one-half of the value of the property will be excluded from the sister's estate if she dies first.
If three sisters inherited property as joint tenants with right of survivorship, the entire value of the property will be in the estate of the first to die.
If the joint tenants are two brothers and each contributed one half the property's purchase price, only one half the property's value will be in the estate of the first brother to die if his executor proves that the other brother contributed half of the purchase price.

Answer(s): D

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