Chapter 15—Preserving Your Estate
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United States – BUSPROG: Reflective Thinking
Bloom’s: Remembering
120. Gift tax liability could be incurred on which of the following transactions?
a.
Providing rent-free apartment for mother
b.
1,000 hours of babysitting for grandchild
c.
Son’s deposit into husband–wife joint checking account
d.
Setting up a revocable trust
e.
$35,000 given to son
PFIN.BILL.17.15-4 – LO: 15-4
United States – BUSPROG: Reflective Thinking
United States – KS – DISC: Investments
Bloom’s: Applying
121. The gift tax exclusion applies
a.
per recipient annually.
b.
per donor annually.
c.
per recipient per lifetime.
d.
per donor per lifetime.
e.
to all spouses’ gifts to each other.
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United States – BUSPROG: Reflective Thinking
United States – KS – DISC: Investments
Bloom’s: Remembering
122. Your gross estate is reduced by the ____ to determine the adjusted gross estate.
a.
b.
Chapter 15—Preserving Your Estate
c.
d.
e.
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United States – BUSPROG: Reflective Thinking
Bloom’s: Applying
123. The basis of inherited property is
a.
the cost of the property to the donor.
b.
the fair market value reported on the estate tax return.
c.
the fair market value minus the cost of the property.
d.
the fair market value plus the cost of the property.
e.
none of these.
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United States – BUSPROG: Reflective Thinking
Bloom’s: Understanding
124. In most cases, charitable contributions
a.
should be made after death.
b.
should not be made.
c.
should be made during life.
d.
produce no income tax benefit.
e.
are subject to gift taxes.
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United States – BUSPROG: Reflective Thinking
Bloom’s: Applying
Chapter 15—Preserving Your Estate
125. Those who could use trust services include all the following except
a.
minors.
b.
busy executives.
c.
the mentally incompetent.
d.
spendthrifts.
e.
All these need trust services.
e
Moderate
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United States – BUSPROG: Reflective Thinking
United States – KS – DISC: Investments
Bloom’s: Applying
126. The annual exclusion amount from estate tax was set at _____ for 2015.
a.
$500,000
b.
$1,000,000
c.
$2,000,000
d.
$3,500,000
e.
$5,340,000
e
Easy
PFIN.BILL.17.15-4 – LO: 15-4
United States – BUSPROG: Reflective Thinking
United States – KS – DISC: Investments
Bloom’s: Remembering
127. Mark owns a vacation home in Florida that he purchased in 1992 for $120,000. The vacation home now has a value
of $500,000. If Mark gifts the home to Glenn, the basis to Glenn will be
a.
$500,000.
b.
$380,000.
c.
$620,000.
d.
$120,000.
e.
none of these.
Challenging
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United States – BUSPROG: Reflective Thinking
United States – KS – DISC: Investments
Chapter 15—Preserving Your Estate
128. [Most | Very few] people need to do estate planning.
129. If you consider wealth only, an individual with an estate expected to exceed [$3,500,000 | $5,430,000] in 2015 must
consider estate planning.
130. Most estates are dissipated because the deceased had [an improper estate plan | no estate plan].
131. [Married | Unmarried] couples have the greater need for estate planning.
Chapter 15—Preserving Your Estate
132. If you die with no valid will in existence, you have died [intestate | testate].
133. A beneficiary of a will [should | should not] serve as a witness to the will.
134. Property held jointly with the right of survivorship [would possibly | would not] be part of your gross estate subject to
federal estate taxes.
135. In most states, a valid will [must be written | can be oral or written].
136. You are married with a 3-year-old child. If you die without leaving a will, in most states [your spouse will inherit
Chapter 15—Preserving Your Estate
your entire estate | your spouse and child will share your estate].
137. The person writing a will is called the [decedent | testator].
138. If you have a small estate, you should [contact an attorney | write your will yourself].
139. Through a [living will | durable power of attorney for health care] you authorize an individual to make health care
decisions for you if you are unable to do so.
140. Claudia had not yet signed her newly written will when she died. The will [would | would not] be valid.
Chapter 15—Preserving Your Estate
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United States – BUSPROG: Reflective Thinking
Bloom’s: Applying
141. You need to make major revisions in your will. You should write a [codicil | new will].
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United States – BUSPROG: Reflective Thinking
United States – KS – DISC: Investments
Bloom’s: Remembering
142. You need to make a minor revision in your will. You should write a [codicil | new will].
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United States – BUSPROG: Reflective Thinking
Bloom’s: Remembering
143. When Jessica gets a divorce, her will leaving everything to her former husband usually will be [nullified | still valid]
in most states.
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United States – BUSPROG: Reflective Thinking
Bloom’s: Applying
144. A(n) [living will | ethical will] includes a personal statement of your values, blessings, life’s lessons, and hopes and
dreams for the future.
Chapter 15—Preserving Your Estate
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United States – BUSPROG: Reflective Thinking
Bloom’s: Remembering
145. A letter of last instruction [is | is not] a legally enforceable document.
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United States – BUSPROG: Reflective Thinking
United States – KS – DISC: Investments
Bloom’s: Remembering
146. Funeral instructions should be included in a [letter of instructions | your will].
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United States – BUSPROG: Reflective Thinking
Bloom’s: Applying
147. Theresa and Ella, mother and daughter, own property as joint tenants with the right of survivorship. Ella [can |
cannot] write a valid will leaving her part of this property to Bob Shockey.
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United States – BUSPROG: Reflective Thinking
Bloom’s: Applying
148. Mike and Tristan, father and son, own property as tenants in common. Tristan [can | cannot] write a valid will
leaving his part of this property to his friend Joe.
Chapter 15—Preserving Your Estate
149. The person setting up a trust is called the [grantor | trustee].
150. Legal title to the property in a trust is held by the [grantor | trustee].
151. You would create a [living | testamentary] trust to be used during your lifetime.
152. You would create a [living | testamentary] trust to be used after you die.
Chapter 15—Preserving Your Estate
153. With a revocable living trust, the value of the assets placed into the trust [do | do not] become public knowledge.
154. If you want to create a living trust that provides tax advantages, you will need to establish [a revocable | an
irrevocable] trust.
155. An appropriate trust to set up with a disabled child being the beneficiary would be the [special needs | minor’s section
2503(c)] trust.
156. Funds from the [minor’s section 2503(c) | crummy] trust must be distributed by the time the beneficiary turns 21.
Chapter 15—Preserving Your Estate
157. If a gift tax has to be paid, the [giver | recipient] of the gift will pay it.
158. The [irrevocable living trust | pour-over will] contains a provision passing the estate to an existing living trust.
159. Your will [may | may not] contain a testamentary trust.
160. A person can give [a limited | any] number of tax free gifts per year.
Chapter 15—Preserving Your Estate
161. You could give any number of people [$14,000 | $25,000] per year without having to pay any gift taxes.
162. You could give an unlimited amount of assets to your [children | spouse] without incurring any gift taxes.
163. Your estate is more likely to be subject to [state | federal] death taxes.
164. For 2015, your net estate value must exceed [$3,560,000 | $5,340,000] before any federal estate taxes will be due.
Chapter 15—Preserving Your Estate
165. The [adjusted gross estate | taxable estate] is calculated by subtracting funeral and administrative expenses from the
gross estate.
166. The [marital exclusion | unified tax credit] can be applied against the tentative tax on estate tax base.
167. [Busy executives | minors] do not need trust services.
168. Estate taxes apply [only to transfers that a deceased makes at death | only to certain transfers made during a
person’s lifetime].
Chapter 15—Preserving Your Estate
169. The gift tax law allows a person to give gifts up to [$10,000 | $14,000] tax free.
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United States – BUSPROG: Reflective Thinking
United States – KS – DISC: Investments
Bloom’s: Remembering
170. A gift’s increase in value after it was given is [included in | excluded from] the donor’s estate.
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United States – BUSPROG: Reflective Thinking
United States – KS – DISC: Investments
Bloom’s: Understanding
171. The unlimited marital deduction is available only if the recipient spouse is a [U.S. citizen and files a gift tax return |
legal resident and does not have to file a gift tax return].
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United States – BUSPROG: Reflective Thinking
United States – KS – DISC: Investments
Bloom’s: Remembering
172. Federal law permits [a limited | an unlimited] deduction for gift tax purposes on property given to a spouse who is a
U.S. citizen.
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United States – KS – DISC: Investments
Bloom’s: Understanding
173. Put the following steps of the estate planning process in order:
a.
Assess your family situation and set estate planning goals.
b.
Formulate and implement your plan.
c.
Gather comprehensive and accurate data.
d.
Designate beneficiaries of your estate’s assets.
e.
List all assets and determine the ownership and value of your estate.
f.
Estimate estate transfer costs.
g.
Review the plan periodically and revise it as necessary.
Chapter 15—Preserving Your Estate
174. If a person dies intestate (without a valid will), the estate is distributed according to established state laws of intestate
succession. According to Utah’s probate code (as described in Exhibit 15.4 of your textbook), what is the estate
distribution for a spouse with no offspring?
175. If a person dies intestate (without a valid will), the estate is distributed according to established state laws of intestate
succession. According to Utah’s probate code (as described in Exhibit 15.4 of your textbook), what is the estate
distribution for a spouse and offspring that are not of the surviving spouse?
176. If a person dies intestate (without a valid will), the estate is distributed according to established state laws of intestate
succession. According to Utah’s probate code (as described in Exhibit 15.4 of your textbook), what is the estate
distribution for no spouse but offspring?
Chapter 15—Preserving Your Estate
177. If a person dies intestate (without a valid will), the estate is distributed according to established state laws of intestate
succession. According to Utah’s probate code (as described in Exhibit 15.4 of your textbook), what is the estate
distribution for no spouse and no offspring but parents?
178. If a person dies intestate (without a valid will), the estate is distributed according to established state laws of intestate
succession. According to Utah’s probate code (as described in Exhibit 15.4 of your textbook), what is the estate
distribution for no spouse, no offspring, no parents, but generation?