#1
In estate planning, what is the primary purpose of a spousal transfer?
To avoid income tax
To reduce estate tax liability
To transfer debts to the spouse
To increase property value
#2
What is the annual gift tax exclusion amount for an individual in the United States?
$10,000
$15,000
$20,000
$25,000
#3
What is the primary advantage of using a Family Limited Partnership (FLP) in estate planning?
Facilitates easy liquidation of assets
Allows for unlimited charitable deductions
Provides control and management continuity within the family
Exempts assets from federal taxation
#4
What is the purpose of a bypass trust (also known as a credit shelter trust) in estate planning?
To avoid income tax on trust earnings
To ensure assets bypass probate and go directly to beneficiaries
To shelter a portion of the estate from estate taxes
To provide immediate liquidity for the surviving spouse
#5
What is the purpose of a life insurance trust (ILIT) in estate planning?
To provide income for the beneficiaries
To minimize estate taxes on life insurance proceeds
To create a charitable remainder trust
To facilitate the transfer of real estate
#6
Which term refers to the total value of a person's estate at the time of their death?
Net income
Gross estate
Tax exemption
Probate estate
#7
What is the unlimited marital deduction in the context of estate taxes?
A deduction for funeral expenses
A deduction for property left to the surviving spouse
A deduction for charitable donations
A deduction for business expenses
#8
Which type of trust allows a surviving spouse to access the income generated by the trust during their lifetime?
Irrevocable trust
Revocable trust
Charitable remainder trust
Qualified personal residence trust
#9
What is the significance of the 'step-up in basis' in the context of inherited assets?
It increases the original purchase price of the asset for tax purposes
It reduces the capital gains tax liability for the heir
It decreases the fair market value of the asset
It exempts the inherited asset from estate taxes
#10
In the context of estate planning, what is a 'crummey trust' designed to accomplish?
Avoiding probate for certain assets
Shifting income to beneficiaries in lower tax brackets
Ensuring the right of withdrawal for gift tax exclusions
Eliminating capital gains tax on appreciated assets
#11
Which tax form is typically used to report estate taxes to the IRS?
Form 1040
Form 706
Form 1099
Form W-2
#12
What is the concept of 'portability' in estate tax law?
The ability to transfer assets between spouses tax-free
The ability to carry over the deceased spouse's unused estate tax exemption
The ability to change the executor of the will
The ability to contest a will in court
#13
Which of the following is NOT a common estate planning tool for spousal transfers?
Living will
Joint tenancy
QTIP trust
Life insurance
#14
What is the purpose of a Generation-Skipping Transfer (GST) tax?
To tax transfers to grandchildren and future generations
To encourage gifts to the same generation
To eliminate estate taxes on small estates
To tax transfers between siblings
#15
What is the concept of 'spousal portability' in relation to estate taxes?
The ability to transfer assets between spouses tax-free
The ability to carry over the deceased spouse's unused estate tax exemption
The automatic transfer of assets to the surviving spouse
The unlimited deduction for gifts to a spouse