Estate planning

1. Answering the following case study requires reading the information in this link:

Case Study: The Dumonts

What type of testamentary trust has Walter created for Judy in his will?

a.

A charitable remainder unitrust

b.

A charitable remainder annuity trust

c.

A grantor retained annuity trust

d.

A charitable lead unitrust

2 points

Question 2

1. Answering the following case study requires reading the information in this link:

Case Study: The Dumonts

The Dumonts would like to help the Nature Conservancy this year by contributing some of Walter’s company stock. Walter would also like to maintain Judy’s life style by providing her with income for life. In addition, Walter would like to minimize taxes and transfer costs to accomplish these objectives. Given these objectives and constraints, which of the following lifetime gifts would be most appropriate?

a.

A bargain sale of stock to the Nature Conservancy.

b.

A gift of stock to a charitable pooled income fund for the Nature Conservancy.

c.

A gift of stock to a charitable remainder unitrust trust for the Nature Conservancy.

d.

A gift of stock to a charitable lead trust for the Nature Conservancy.

2 points

Question 3

1. Answering the following case study requires reading the information in this link:

Case Study: The Dumonts

Judy’s will establishes a trust that distributes all income from the motel to Lee annually. Judy was concerned that this income could be subject to Lee’s creditors, so she included a spendthrift clause in the trust. All of the following statements about trusts with spendthrift provisions are correct, except:

a.

A beneficiary may not assign, pledge or promise to give distributions from the trust to others.

b.

A beneficiary should not be given a general power of appointment over trust corpus.

c.

Spendthrift provisions apply only to self-settled trusts.

d.

Trustees can make distributions to beneficiaries solely on a discretionary basis.

2 points

Question 4

1. Answering the following case study requires reading the information in this link:

Case Study: The Dumonts

Assume that Walter dies today. What statement concerning the universal life insurance policy he owns on Judy’s life is correct?

a.

The cash value will be included in his gross estate.

b.

If Walter had transferred ownership of the policy to Lee four months ago, the policy would not be included in Walter’s gross estate.

c.

The policy will not be included in Walter’s probate estate.

d.

The full death benefit amount will be included in Walter’s estate.

2 points

Question 5

1. Answering the following case study requires reading the information in this link:

Case Study: The Lindsays

Which of the following statements regarding property held as tenancy in common, the form under which Jim and Todd own their fishing boat, are correct?

a.

There is no right of survivorship between Jim and Todd.

b.

All of the property is included in the probate estate of the first co-owner to die.

c.

The entire value of the fishing boat will be includible in Jim’s gross estate because Todd did not contribute anything to the purchase price.

d.

Jim can change his will and leave his interest in the fishing boat to Jonathan.

2 points

Question 6

1. Answering the following case study requires reading the information in this link:

Case Study: The Lindsays

How will per stirpes affect Jim and Nancy’s wills?

a.

“After Jim and Nancy have both died, the estate of the second to die will go to Todd only, since he is their only living child. ”

b.

“After Jim and Nancy have both died, the estate of the second to die will go in equal shares to Todd and Allison. ”

c.

“After Jim and Nancy have both died, the estate of the second to die will go 50% to Todd and 50% to Jonathan, who takes Carol’s place in family lineage. ”

d.

“After Jim’s death, Nancy will be prevented from changing her will and leaving the estate entirely to her second husband. “