HS-330 Online Practice Questions and Answers

In which of the following estates would it normally be most desirable to provide for a federal estate tax marital deduction for approximately one half of the property?

A. In the estate of the spouse with the bulk of the family wealth when only one spouse has substantial wealth

B. In the estate of the first spouse to die, regardless of the relative wealth of each spouse

C. In the estate of the first spouse to die when neither spouse has a substantial estate

D. In the estate of the spouse who does not have the bulk of the family wealth when only one spouse has substantial wealth

A father wants to accumulate funds for his 12-year-old son's college education. On the advice of his attorney, the father establishes an IRC Section 2503(c) trust and funds it with annual gifts. All the following statements concerning this arrangement are correct EXCEPT:

A. In the event of the son's death prior to age 21, trust assets must either be payable to the son's estate or be subject to a general power of appointment held by the son.

B. The father's annual gift tax exclusion must be reduced by any amount used to pay college tuition costs.

C. The trust must be irrevocable.

D. Any accumulated income and all trust principal must be available for distribution to the son when he attains age 21.

The executor of an estate has a choice of waiving the executor's fee. Factors that should be considered by the executor in making this choice include all the following EXCEPT

A. the estate tax bracket of the estate

B. the income tax brackets of the other beneficiaries

C. whether the executor is otherwise a beneficiary of the estate

D. the income tax bracket of the executor

Which of the following is (are) a permissible deduction from a decedent's gross estate to determine the decedent's adjusted gross estate?

1.

Expenses incurred for the benefit of individual heirs.

2.

Expenses incurred in the collection of estate assets.

A. Neither 1 nor 2

B. 2 only

C. 1 only

D. Both 1 and 2

A man recently died with only probate assets. Under the terms of his will, he left his entire probate estate outright to his wife. The following are relevant facts about the estate:

-Gross estate $1,700,000

-Estate administration expenses 30,000

-Debts of decedent 65,000

-

Allowable funeral expenses 5,000

A.

$1,635,000

B.

$1,695,000

C.

$1,665,000

D.

$1,600,000

Which of the following statements concerning property is correct?

A. A tree growing on land is tangible personal property.

B. A mortgage on real estate is real property.

C. Any property that is not real property is personal property.

D. A bond issue secured solely by a corporation assets is tangible personal property.

A married man died intestate. In addition to his wife, he was survived by two minor children and both his parents. Which of the following statements describes the typical intestate distribution in this situation?

A. The widow receives at least one-third of the estate and the children divide the remainder of the estate equally.

B. The widow receives one-third of the estate and the remainder is divided equally among the two children and the parents of the decedent.

C. The widow receives half the estate and the remaining half is divided equally between the decedent's parents.

D. The widow receives the entire probate estate as trustee for the benefit of the two minor children.

All the following factors are important in assessing liquidity needs in estate planning EXCEPT the

A. ages of the residuary estate beneficiaries

B. types of assets that comprise the estate

C. marital status of the testator

D. projected estate tax liability

Which of the following statements concerning an installment sale is (are) correct?

1.

Some portion of the purchase price must be paid in any one taxable year other than the year of sale.

2.

Installments due after the seller's death are excludible from the seller's gross estate.

A. 1 only

B. Neither 1 nor 2

C. 2 only

D. Both 1 and 2

A person dying without a will loses all the following rights EXCEPT the right to

A. give property to a charity

B. take maximum advantage of the marital deduction

C. name the person to settle the estate

D. have assets pass to heirs