QUESTION: 65

A married man has two adult sons. His entire estate is in excess of $1,500,000 and consists entirely of probate assets. He wants to make certain that if he predeceases his wife she will receive all estate income as long as she lives, and the assets remaining at her death will pass equally to their two sons. He wants to pass all assets to this wife and sons as free of federal estate taxes as possible. To best accomplish these objectives, the man should include which of the following estate plans in his will?

Establish a marital deduction trust with a general power of appointment for half his estate and place the remainder in a QTIP trust
Establish a QTIP trust for half his estate and bequeath the remainder to his wife
Establish a QTIP trust for his entire estate
Establish a bypass trust equal to the applicable exclusion amount and place the remainder of his estate in a QTIP trust

Answer(s): D

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QUESTION: 66

Which of the following statements concerning the taxation of estates and trusts is (are) correct?
1. They are taxed similarly to partnership entities.
2. They are taxed on distributable net income (DNI) that is retained.

1 only
Both 1 and 2
Neither 1 nor 2
2 only

Answer(s): D

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QUESTION: 67

All the following assets owned by a decedent pass by operation of law or by contract EXCEPT

death benefits of a pension plan payable to a named beneficiary
life insurance payable to a named beneficiary
probate assets passing under the terms of a valid will
jointly owned real estate passing to the surviving joint tenant

Answer(s): C

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QUESTION: 68

A woman is the income beneficiary of an irrevocable trust. All the following powers held by her will cause all the assets in the trust to be includible in her gross estate for federal estate tax purposes EXCEPT

the testamentary special or limited power to direct the trustee to distribute trust assets to her children
the testamentary power to direct the trustee to use trust assets to pay her estate taxes
the power to direct the trustee to distribute trust corpus to her
the testamentary power to direct the trustee to pay trust assets to her estate

Answer(s): A

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QUESTION: 65

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QUESTION: 68

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