Question

Which of the following statements is correct

1. An ABC Trust arrangement utilizes a General Power of Appointment Trust, a QTIP Trust and a GST Trust to maximize the use of a decedent’s applicable estate tax credit.
2. When too few assets pass to a decedent’s surviving spouse, and as such the decedent’s taxable estate is greater than the applicable estate tax credit equivalency, the decedent’s estate is said to be overqualified.
3. When a decedent’s taxable estate is less than the applicable estate tax credit equivalency, the estate must still file the 706.\
4. The ultimate beneficiary of a QTIP Trust is selected by the grantor of the QTIP.

Answer 1

Option D is correct.

REASONS:

A) An ABC Trust arrangement utilizes a bypass trust, a GPOA Trust and a QTIP Trust to provide necessary support to a surviving spouse while maximize the use of a decedent’s applicable estate tax credit.

B) When too few assets pass to a decedent’s surviving spouse, and as such the decedent’s taxable estate is greater than the applicable estate tax credit equivalency, the decedent’s estate is said to be underqualified.

C) Form 706 is used by Decendent's Executor to calculate the estate tax . This tax is levied on the entire taxable estate no only on the share of beneficiary.

D) The ultimate beneficiary of a QTIP Trust is selected by the grantor of the QTIP.

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