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15. Preserving Your Estate
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b. letter of last instructions.
c. living will.
d. ethical will.
e. memorandum.
29. A letter of last instructions is a(n):
a. legal document that authorizes another person to take over someone’s financial affairs and act on his or her
behalf.
b. document that precisely states the treatments a person wants if he or she becomes terminally ill.
c. written power of attorney authorizing an individual to make health care decisions on behalf of the principal when
the principal is unable to make such decisions.
d. informal memorandum that is separate from a will and contains suggestions or recommendations for carrying out
a decedent’s wishes.
e. personal statement left for family, friends, and community that shares your values, blessings, life’s lessons, and
hopes and dreams for the future.
30. A document that precisely states the treatments a person wants if he or she becomes terminally ill is called a(n):
a. living will.
b. ethical will.
c. memorandum.
d. letter of instructions.
e. codicil.
15. Preserving Your Estate
15. Preserving Your Estate
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33. A grantor is also called the:
a. heir.
b. beneficiary.
c. joint owner.
d. settlor.
e. attorney.
34. The unified rate schedule applies to federal _____ taxes.
a. sales and gift
b. gift and service
c. gift and estate
d. infrastructure and estate
e. estate and professional
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35. The applicable exclusion amount from estate tax for 2018 was:
a. $2,410,000.
b. $3,780,000.
c. $5,430,000.
d. $7,820,000.
e. $11,180,000.
36. Which of the following is an advantage of giving gifts?
a. Gifts avoid depreciation in value.
b. Gift tax exclusion attracts more estate tax.
c. Marital deduction allows gifts to be tax free.
d. The annual inclusion amount increases with gifts.
e. There is no tax exemption for charitable contributions.
37. Which of the following statements about the portability of the unified transfer tax credit is true?
a. When the first spouse dies, then any unused applicable exclusion amount will carry over to the other spouse.
b. When the first spouse dies, then any unused applicable exclusion amount will carry over to the government.
c. When the first spouse dies and is left with an excess amount after using the applicable exclusion, then the excess
amount will carry over to a trust.
d. It is a method of reducing gift taxes with the consent of the other spouse in which the gift can be treated as if each
had been given one-half of it.
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e. It is a method of transferring assets between spouses, either by gift or through estate.
38. Your gross estate is reduced by the _____ to determine the adjusted gross estate.
a. state death tax credit
b. orphan’s deduction
c. marital deduction
d. funeral and administrative expenses
e. previous year’s income tax
39. In 2018, James gave his son John a $5,000,000 term life insurance policy taken on James’ life. At the time of the gift,
James was in good health, and the value of the term insurance policy for gift tax purposes was less than the $14,000
annual exclusion amount. However, James died in 2019. Which of the following statements is true?
a. In 2019, the $5,000,000 gift will be included in James’ gross estate for estate tax purposes.
b. In 2019, the $5,000,000 payout will not be included in James’ gross estate for estate tax purposes as he had
outlived the transfer by more than 1 year.
c. James will get an annual exclusion of $50,000, i.e., 1% of the gift amount in 2019.
d. In 2019, James will be eligible for a unified tax credit of $500,000, i.e., 10% of the gift amount, as he has outlived
the transfer by more than 1 year.
e. James cannot avail the charitable deduction in 2019 as he did not outlive the transfer by more than 1 year.
15. Preserving Your Estate
15. Preserving Your Estate
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42. The person setting up a trust is called the:
a. grantor.
b. trustee.
c. attorney.
d. beneficiary.
e. owner.
43. A trust that comes into existence only after the will is probated is known as a _____ trust.
a. testamentary
b. living
c. tenancy
d. codicil
e. revocable
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DATE MODIFIED: 12/5/2018 5:56 PM
44. You could gift any number of people _____ per year without having to pay any gift taxes.
a. $36,000
b. $12,000
c. $25,000
d. $5,000
e. $15,000
45. You could give an unlimited amount of assets to your _____ without incurring any gift taxes.
a. children
b. spouse
c. friends
d. charity trust
e. relatives
46. The unified tax credit can be applied against the:
a. total income of the beneficiary of a will.
b. tentative tax on the estate tax base.
c. adjusted gross estate.
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d. total estate taxes.
e. gross estate.
47. The unused unified transfer tax (UTT) credit can be used by the:
a. spouse.
b. siblings.
c. children.
d. parents.
e. grantor.
48. If the ownership of a closely held company is less than 50% of the stock, then the ownership is termed a:
a. minority interest.
b. majority interest.
c. marketable asset.
d. block asset.
e. blockage discount.
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49. A _____ is applied to reduce estate tax when a large amount of real estate is for sale in one area.
a. marketability discount
b. minority discount
c. blockage discount
d. property discount
e. land discount
50. If the amount of stock in the gross estate represents a substantial holding in a company, then the value subject to the
tax will be reduced by the:
a. marketability discount.
b. minority discount.
c. blockage discount.
d. property discount.
e. stock discount.
15. Preserving Your Estate
