Certified Financial Planner Estate Planning

1.Marisol and her brother Mateo own a lake cabin as joint tenants with right of survivorship. Marisol dies. Her will leaves everything she owns to her daughter Luz. Who takes Marisol's share of the cabin?

2.Helen and her cousin Priya own a downtown loft as tenants in common, each with a one-half share. Helen's will leaves her probate estate to her nephew Owen. Priya survives Helen. What happens to Helen's half?

3.Luis named his sister Carla as the payable-on-death beneficiary of his credit-union savings account. His later will leaves that same account to his friend Andre. Luis dies. Who receives the account?

4.Ruth registered her brokerage account transfer-on-death to her grandson Felix and never changed that registration. Her will gives all investments to her church. At Ruth's death, what happens to the brokerage account?

5.Dean and his neighbor Scott hold a fishing boat as joint tenants with right of survivorship. Dean's will says his half of the boat goes to his son Kyle. Dean dies first. What is the result?

6.Amina and her colleague Jordan own a parking lot as tenants in common, 60 percent Amina and 40 percent Jordan. There is no survivorship language. Amina's will leaves her probate assets to her spouse, Samir. Who takes Amina's 60 percent?

7.Horace opened a payable-on-death certificate of deposit naming his niece June. His rare books are titled in his name alone, and his will leaves the books to June. Which asset passes outside probate?

8.Naomi and Ellis own their studio as joint tenants with right of survivorship. Naomi recorded a transfer-on-death deed on a vacant lot naming her brother Seth. Her checking account is in her name alone, and her will leaves the residue to Ellis. Which asset must pass through probate?

9.Victor's money-market account is payable on death to his daughter Irene. He also owns one-third of a warehouse as tenants in common with his brother Paul. Victor's will leaves his probate estate to Irene, and Paul survives. What is true?

10.Camille dies without a will. Under the intestacy statute in this problem, her only child inherits her probate estate. Her savings account is in her name alone. Her son Marc survives her, and she had no spouse. Who receives the account?

11.Grant signed a valid will leaving his probate estate to his friend Nadine. His brokerage account is in his name alone. His brother would have been his heir if Grant had died intestate. Who receives the brokerage account?

12.Evelyn deeded her house to her revocable trust during life and signed a pour-over will leaving any probate residue to that trust. Her car is still titled in her name alone. At her death, what is true of the car?

13.Omar dies without a will. The intestacy statute in this problem gives the entire probate estate to a surviving spouse when there is no descendant. His boat is in his name alone. He is survived by his spouse, Laila, and by his parents. Who receives the boat?

14.Sylvia funded her revocable trust with her investment account and signed a pour-over will leaving probate residue to that trust. Her stamp collection is still in her own name. Her son Pete is the trust's only beneficiary. What happens to the stamps?

15.Harold's valid will leaves his solely owned condo to his niece. His revocable trust holds only a bond ladder, and the condo was never deeded to the trust. Who receives the condo?

16.Rosa dies without a will. The intestacy statute in this problem gives one-half of the probate estate to the surviving spouse and one-half to the only child. Her mutual fund is in her name alone. She is survived by her spouse, Ben, and their child, Theo. Who receives the fund?

17.Patrick deeded his farm to his revocable trust years ago. His pour-over will leaves any leftover probate property to that trust. He dies owning no other assets. His daughter is the trust beneficiary. Does the farm go through probate?

18.Beatrice signed a paper leaving her painting to a friend, but the court refused to probate it because the witnesses were missing. The intestacy statute in this problem then gives her probate estate to her father, her only heir. The painting is in her name alone. Who receives it?

19.Ingrid signed a durable financial power of attorney naming her brother Hans as agent. She later loses capacity. The electric bill is due, and Ingrid is still alive. Who may pay it from her account?

20.Joel is unconscious. His health-care power of attorney names his spouse, Renee, to make medical decisions. A separate financial power of attorney names his brother Cal. The hospital needs consent for surgery. Who may give it?

21.Diane signed a living will stating that she refuses a ventilator if she is terminally ill and unable to decide. She did not name a financial agent. She is now in that condition. What does the living will do?

22.Frank's durable financial power of attorney names his daughter Elise. Frank dies on Monday. On Tuesday a buyer asks Elise to deed Frank's solely owned land, a sale Frank had not signed. Can Elise use the power of attorney to sign?

23.Paula signed only a health-care power of attorney naming her friend Glen. She is incapacitated, and her mortgage payment is late. Can Glen use that document to withdraw money and pay the lender?

24.Samuel signed a living will about life support and a durable financial power of attorney naming his nephew Ira. Samuel can no longer manage money, and he is not in the medical condition described in the living will. Who may manage his brokerage account?

25.Clara named her son Noah on a health-care power of attorney and signed a living will declining a feeding tube if she is permanently unconscious. She is now permanently unconscious. Which document states Clara's own refusal of the feeding tube?

26.Martin is competent. He wants his sister to pay his bills only if he later becomes incapacitated. He does not want anyone making medical decisions, and he already has views against prolonged life support. Which document gives the sister authority over the bills at a later incapacity?

27.Yvonne signed a durable financial power naming her spouse to pay bills, a health-care power naming her adult child to speak with doctors, and a living will refusing dialysis if she is terminally ill. She is now terminally ill, unable to communicate, and the rent is due. Which statement is correct?

28.The annual exclusion is $18,000 and Nora's remaining lifetime exclusion is $13,000,000. She gives her daughter $18,000 cash. Her spouse does not consent to split gifts. How much of Nora's lifetime exclusion does this gift use?

29.The annual exclusion is $19,000 and Peter's remaining lifetime exclusion is $13,610,000. He gives his nephew $49,000. His spouse does not consent to split the gift. How much lifetime exclusion does Peter use?

30.The annual exclusion is $17,000 and Celia's remaining lifetime exclusion is $12,920,000. She gives her son $17,000 and asks to treat half as her spouse's gift. Her spouse does not consent. What is the result?

31.The annual exclusion is $18,000 and Marcus's remaining lifetime exclusion is $13,000,000. His spouse consents to split gifts. Marcus gives his friend $40,000. How much of Marcus's own lifetime exclusion is used?

32.The annual exclusion is $16,000 and Ida's remaining lifetime exclusion is $12,060,000. She gives her granddaughter $10,000. Her spouse does not consent to split gifts. What is the gift-tax result?

33.The annual exclusion is $18,000 and each spouse's remaining lifetime exclusion is $13,610,000. Helena's spouse consents to split gifts. Helena gives one donee $100,000. How much lifetime exclusion do the two spouses use combined?

34.The annual exclusion is $15,000 and Ray's remaining lifetime exclusion is $11,700,000. He gives his brother $55,000. His spouse does not consent to split the gift, and Ray has made no earlier taxable gift. What is the result?

35.The annual exclusion is $19,000 per donee and Walt's remaining lifetime exclusion is $13,990,000. He gives his daughter $19,000 and his son $19,000. His spouse does not consent to split gifts. How much lifetime exclusion does Walt use?

36.The annual exclusion is $18,000 and Gina's remaining lifetime exclusion is $12,000,000. Her spouse consents to split gifts. Gina gives her cousin $18,000. How much of Gina's lifetime exclusion is used?

37.Thomas dies with an estate of $6,000,000. His basic exclusion is $13,000,000. Every asset passes outright to his spouse, who is a U.S. citizen. What marital deduction is allowed?

38.Keiko is not a U.S. citizen. Her spouse's $4,000,000 estate passes outright to her and not into a qualified domestic trust. In this problem a noncitizen spouse receives the marital deduction only for property placed in that trust. What marital deduction is allowed?

39.Alan's basic exclusion was $10,000,000. His $4,000,000 estate all passed to his U.S.-citizen spouse, the marital deduction made the taxable estate $0, and he had used no exclusion during life. The executor elected portability. His spouse has her own unused basic exclusion of $10,000,000. How much exclusion can she use later?

40.Brenda's spouse died with a basic exclusion of $9,000,000, all of it unused. The executor did not elect portability. Brenda's own basic exclusion is $12,000,000, and she has used none of it. How much exclusion does Brenda have from these facts?

41.Colin's estate is $15,000,000. He leaves $11,000,000 outright to his U.S.-citizen spouse and $4,000,000 to his children. His basic exclusion is $13,000,000. What marital deduction is allowed?

42.Dalia, who is not a U.S. citizen, survives her spouse. In this problem the marital deduction is allowed only for assets passing into the qualified domestic trust in the plan. $2,500,000 passes into that trust, and $500,000 is left outright to Dalia. What marital deduction is allowed?

43.Edward's basic exclusion was $13,000,000. His taxable gifts and taxable estate used $3,000,000 of it. The executor made the portability election. What is the deceased spousal unused exclusion?

44.Fiona, a U.S. citizen, received $8,000,000 from her spouse. The marital deduction reduced the taxable estate to $0. The spouse's basic exclusion was $13,610,000. The executor did not elect portability. What deceased spousal unused exclusion may Fiona add?

45.George's $20,000,000 estate passes outright to his U.S.-citizen spouse. His basic exclusion is $12,000,000. What is the marital deduction, and is estate tax due at George's death?

46.Arthur's bypass trust is funded with $5,000,000, the exclusion available at his death. The trustee may pay income to Arthur's spouse or to their children. The remainder goes to the children. At the spouse's later death, is the bypass trust included in the spouse's estate?

47.Harriet's executor elected QTIP treatment for a trust that pays all income to her surviving spouse for life. That election produced the marital deduction at Harriet's death. The remainder goes to her children. At the spouse's death, which estate includes the trust?

48.Lionel's QTIP trust, as this problem defines it, must pay all income at least annually to his surviving spouse, Carla. No one else may receive distributions while Carla is alive. The children ask for this year's income. Who must receive the QTIP income?

49.Nadia is the trustee of her father's bypass trust. The trust says she may sprinkle income among the surviving spouse and the children, and it does not require that all income go to the spouse. Who may receive income this year?

50.Warren's estate available for two trusts is $18,000,000. His available exclusion is $10,000,000. The plan funds a bypass trust with that exclusion and places the balance, for his U.S.-citizen spouse, in a QTIP trust. How much goes into each trust?

51.When Iris dies, she owns $2,000,000 in her own name. A QTIP trust worth $6,000,000 is included in her estate. A bypass trust worth $4,000,000 is not included in her estate. What amount of these three items is in her gross estate?

52.Quentin's bypass trust is funded with $3,000,000 and uses his exclusion. His QTIP trust receives $7,000,000, and the executor elects QTIP treatment for his U.S.-citizen spouse. Which amount receives the marital deduction at Quentin's death?

53.Belinda, the surviving spouse, dies. The bypass trust holds $2,000,000 and is outside her estate. The QTIP trust holds $9,000,000, and this problem includes a QTIP in the surviving spouse's estate. Which trust is taxed in Belinda's estate?

54.Lena's QTIP must pay her all of its income. The QTIP earned $40,000 this year. The bypass trust earned $15,000, and its trustee paid that $15,000 to the children, which the bypass permits. How much income must the QTIP pay Lena?

55.Oscar owns a policy on his own life. He can change the beneficiary and surrender the policy, which this problem treats as incidents of ownership. The death benefit is $800,000. How much is included in Oscar's gross estate?

56.An irrevocable trust bought a policy on Pamela's life and has owned it from the start. Pamela never held an incident of ownership, and she never transferred a policy. The death benefit is $1,200,000. How much is included in her gross estate?

57.Teresa transferred her life policy to an irrevocable trust 18 months before she died and kept no incidents of ownership afterward. This problem includes the proceeds when the insured transfers the policy within three years of death. The death benefit is $500,000. What is included in her estate?

58.Vincent gave his life policy to an irrevocable trust seven years before he died and kept no incidents of ownership. This problem applies the three-year rule only to a transfer within three years of death. The death benefit is $750,000. What is included in his estate?

59.Walter's spouse owns a policy on Walter's life, bought it herself, and is the beneficiary. Walter never owned the policy and holds no incident of ownership. There was no transfer from Walter. The death benefit is $300,000. Is it in Walter's gross estate?

60.Yolanda owns a policy on her own life and holds the incidents of ownership. The estate is the beneficiary. The death benefit is $250,000, and the cash value just before death was $40,000. What amount is included in her gross estate because she owned the policy?

61.Angelo assigned his life policy to an irrevocable trust two years before he died. This problem treats that assignment as a transfer within three years and includes the proceeds. The death benefit is $1,000,000. The cash value on the assignment date was $15,000. What is included in his estate?

62.Carmen's adult son bought and has always owned a policy on her life. Carmen never had an incident of ownership and never transferred the policy. The $640,000 death benefit is paid to the son. How much is included in Carmen's gross estate?

63.Dennis gave his life policy to an irrevocable trust four years before he died, but he kept the right to change the beneficiary. This problem does not apply the three-year rule to a transfer made more than three years earlier. It does include proceeds when the insured keeps an incident of ownership. The death benefit is $900,000. What is included?

64.Elena inherited stock from her mother. Her mother's basis was $25,000, and the fair market value at death was $80,000. Elena later sells the stock for $90,000. What is Elena's gain?

65.Farah received stock as a lifetime gift. The donor's basis was $42,000, and the fair market value at the gift was $100,000. Farah sells the stock for $115,000. This lifetime gift takes a carryover basis. What is her gain?

66.Gloria and her spouse own their house as community property. This problem gives both halves a new basis at the first death. Their combined basis was $200,000, and the fair market value at his death is $500,000. Gloria survives. What is her basis in the whole house?

67.Howard and his spouse hold a cabin as joint tenants in a common-law state. It is not community property. This problem gives a new basis only to the decedent's half. The combined basis is $180,000, and the fair market value at her death is $420,000. Howard survives. What is his basis?

68.Judith inherits a fishing boat. The decedent's basis was $40,000, and the fair market value at death was $70,000. Judith sells the boat for $85,000. What is her gain?

69.Kenneth's aunt gives him a violin during her life. Her basis is $8,000, and the fair market value at the gift is $22,000. Kenneth sells the violin for $26,000. The gift uses carryover basis. What is his gain?

70.Laura and her spouse own community-property shares. This problem steps up both halves at his death. Their basis was $60,000, and the fair market value at death is $140,000. Laura sells every share the next day for $140,000. What is her gain?

71.Miles inherits a piano. The decedent paid $3,000 for it, and the fair market value at death is $9,000. Miles does not sell it. What is Miles's basis?

72.Nina receives a painting by lifetime gift. The donor's basis is $4,500, and the fair market value on the gift date is $11,000. Nina does not sell it. What is Nina's basis?

73.Edith funded a trust for her grandson Noah only with her own savings. In this problem a third-party special-needs trust, funded by someone other than the beneficiary, does not repay Medicaid. At Noah's death, may the remainder pass to his sister with no Medicaid payback?

74.Noah received a lawsuit settlement in his own name, and it was moved into a trust. In this problem that first-party trust must repay Medicaid from what is left. At his death the trust holds $200,000, the state paid $120,000 of Medicaid, and his brother is the next taker. What happens?

75.Rebecca's life insurance is payable to a trust she created and funded for her disabled child. The child never owns the proceeds. In this problem that third-party special-needs trust does not require a Medicaid payback. Is a payback required at the child's death?

76.Sonia owned an inheritance, and it was placed in a first-party special-needs trust. In this problem the trust must repay Medicaid, but only up to the assets left in the trust. At her death the trust holds $50,000, and the state paid $70,000 of Medicaid. What can the state collect from the trust?

77.Ulrich's uncle created a trust with the uncle's own money for Ulrich, who has a disability. Ulrich never owned the funds. In this problem this third-party special-needs trust does not repay Medicaid. His siblings are the remainder beneficiaries. Who is paid at Ulrich's death?

78.Vera's mother put $300,000 of the mother's money into a third-party special-needs trust, which this problem says has no payback. Vera's own $100,000 settlement went into a first-party trust, which must repay Medicaid. Medicaid paid $80,000. At Vera's death both trusts are unchanged. How much must be used for payback?

79.Wesley adds more of his own savings to a trust he created for his disabled daughter. She contributes nothing, and the trust has always held only his money. In this problem a third-party special-needs trust funded this way does not require a payback. Does his new contribution create a payback duty?

80.Ximena's own savings of $40,000 fund a first-party special-needs trust. In this problem that trust must repay the Medicaid that was paid for her, up to the amount left in the trust. The state paid $15,000, and the trust still holds $40,000 at her death. What is the payback?

81.Yara wants her $250,000 to avoid a Medicaid payback for her disabled son. In this problem a gift he owns, even if later moved into a trust, is a first-party trust and must repay Medicaid. A transfer straight into the third-party trust she created does not. Which transfer avoids the payback?

82.Zachary's charitable remainder unitrust is worth $500,000 this year and pays 5 percent of that value to his sister. The charity receives the remainder only when the trust ends. How much does his sister receive this year?

83.Abigail's charitable remainder annuity trust pays her brother a fixed $20,000 a year. It is not a percentage of the trust's value. This year the trust is worth $430,000. What does her brother receive this year?

84.Benjamin is the income beneficiary of a charitable remainder trust. At his death the balance left in the trust is $310,000, and the trust document gives that remainder to a named charity. Who receives the $310,000?

85.Catherine's charitable remainder unitrust pays her 6 percent of this year's value. The trust is worth $250,000. The charity receives the remainder only when the trust ends. How much does Catherine receive this year?

86.Dominic's charitable remainder unitrust is worth $800,000 and pays 5 percent of that value to his cousin this year. The charity receives the remainder only when the trust ends. How much does the charity receive this year?

87.Esther's charitable remainder trust ends this year. After the final $12,000 income payment to her cousin, the balance left is $275,000. The document gives that remainder to charity. What amount does the charity receive?

88.Franklin transfers $1,000,000 to a charitable remainder trust. The present value of the charitable remainder is $420,000, and the present value of the income interest is $580,000. Using those amounts, what is his charitable deduction?

89.Georgia's charitable remainder unitrust pays 7 percent of its $300,000 value this year to her uncle. The remainder goes to charity when the trust ends. What is the result this year?

90.Henry's charitable remainder annuity trust, funded with $600,000, pays his brother $30,000 a year. At the brother's death the balance is $450,000 and it goes to charity. During the brother's life, what does he receive each year?

91.Ivan's estate tax is $480,000, due nine months after death. A policy payable to the estate pays $600,000 two months after death. The land, worth $2,000,000, cannot be sold before the tax is due. What is the liquidity result?

92.Julia's buy-sell agreement pays her estate $900,000 within 90 days of death. The estate tax is $700,000, due nine months after death. The estate has no other cash. Does the buy-sell payment cover the tax on time?

93.Kurt's only liquid asset is life insurance payable to the estate. It pays $200,000 thirty days after death. The estate tax is $350,000, due nine months after death. There is no buy-sell payment. What is the result?

94.Leila's estate will receive $400,000 of life insurance in month two and a $250,000 buy-sell payment in month four. Both are paid to the estate. The estate tax is $500,000, due in month nine. What is the liquidity result?

95.Malcolm's ranch cannot be sold before the estate tax is due. The tax is $1,000,000, due nine months after death. Insurance payable to the estate pays $1,000,000 in month three. Can that insurance pay the tax without a sale of the ranch?

96.Natalie's buy-sell agreement pays her estate $2,000,000, but the contract says payment is due three years after death. The estate tax is $500,000, due nine months after death. The estate has no other cash. Does this payment arrive in time?

97.Oliver's life insurance, payable to his estate, pays $800,000 one month after death. The estate tax is $275,000, due nine months after death. How much of the insurance remains after the tax is paid?

98.Penelope's partner must buy her interest for $1,500,000 under a buy-sell agreement, and the closing is four months after death. The estate tax is $1,200,000, due nine months after death. The estate's equipment cannot be sold quickly. What pays the tax?

99.Rashid's children receive $900,000 of life insurance paid to them personally, and they owe none of it to the estate. The estate has $50,000 of cash. A buy-sell agreement pays the estate $700,000 six months after death. The estate tax is $600,000, due nine months after death. Which source pays that tax on time?

100.Sandra's IRA beneficiary form names her daughter. Her will, signed later, leaves that same IRA to her son. Sandra dies. Who receives the IRA?

101.Theodore's life insurance names his brother as beneficiary. His will leaves all of his property to his spouse. The policy designation, not the will, controls these proceeds. Who receives the death benefit?

102.Ursula is the named beneficiary of her father's IRA. She rolled it into an account in her own name and spent part of it. A disclaimer in this problem must be in writing, made within nine months, and made before she accepts the asset. Can she disclaim now?

103.Violet is the primary beneficiary of a life insurance policy, and her niece is the contingent beneficiary. Violet signs a written disclaimer within nine months, before taking any benefit. This problem then passes the proceeds to the contingent beneficiary, not to a person Violet picks. She wants her friend to receive them. Who does?

104.Wayne's 401(k) beneficiary form names his revocable trust. His will leaves the residue of his estate to a charity. The plan designation controls the account. Who receives the 401(k)?

105.Xavier's annuity contract names his partner as the death beneficiary. His will leaves that annuity to his brother. The contract designation controls. Who receives the annuity at Xavier's death?

106.Zara is the transfer-on-death beneficiary of her mother's brokerage account. She has not accepted it. A disclaimer in this problem must be signed within nine months after death. Her mother died on March 10, and Zara signs the disclaimer on December 20 of that year. Is the disclaimer timely?

107.Aaron is the primary beneficiary of an IRA, and his sister is the contingent beneficiary. He signs a written disclaimer within nine months and before accepting the account. This problem then passes the IRA as if he had died first. His will leaves his residue to a friend. Who receives the IRA?

108.Bianca inherited shares under a beneficiary registration and cashed a dividend paid on those shares. This problem treats that dividend as acceptance of the asset, and a disclaimer must be made before acceptance. The nine months have not run, and her written disclaimer is otherwise ready. May she still disclaim?