Question

1. Identify whether the power of appointment described is a general power of appointment or a...

1. Identify whether the power of appointment described is a general power of appointment or a special power of appointment.

A.    A holder can exercise the power to appoint property to himself with the consent of the other trust beneficiary.

B.    A holder can exercise the power in favor of her creditors.

C.    A holder was given a testamentary power to exercise the power in favor of his children.

D.    A holder can exercise the power for her comfort and support.

2. Paul established a trust for Elaine that gave her a life estate with a general power to appoint the greater of $5,000 or 5% of the trust corpus to herself each year. When Elaine died, the trust was valued at $700,000 and she had not yet withdrawn money from the trust that year. What amount was included in Elaine’s estate from this trust?

A.    $700,000

B.    $35,000

C.    $5,000

D.    $0

3. Adele established an irrevocable trust and funded it with $1.5 million in securities. Her three married children are the beneficiaries of the trust, and each child can withdraw $50,000 of the trust corpus each year. Her daughter Liz did not withdraw money from the trust this year. Did Liz make a taxable gift to her brother and sister who are the other beneficiaries of the trust?

A.    No, because the amount of the power that lapsed was less than 5% of the trust corpus.

B.    Yes, because Liz allowed her general power of appointment over the trust property to lapse.

C.    No, because Liz had a limited power of appointment over the trust corpus, which is not taxable.

D.    Yes, because the right to make a withdrawal is considered a taxable gift to the other beneficiaries when the withdrawal right is not exercised.

4. Charlie created a trust for his daughter Chelsea and his son Jonathan. A POA clause gives each child a noncumulative right to withdraw the greater of $5,000 or 5% of the value of the trust each year. Charlie transferred $120,000 into the trust this year; how much of his annual exclusion can be used to offset the taxable gift for each donee?

A.    $5,000 per donee

B.    $6,000 per donee

C.    $15,000 per donee

D.    $30,000 per donee

5. Spiros and Nicki have established a trust to benefit their two children and five grandchildren. Spiros transferred a $2 million single premium insurance policy on his life into the trust, which had a gift tax value of $340,000. The beneficiaries of the trust can withdraw the greater of $5,000 or 5% of the trust corpus each year. Which of the following statements are correct?

A.    With gift splitting, each parent can take seven annual exclusions to reduce the taxable gifts by $105,000.

B.    For GST tax purposes, Spiros and Nicki can take five annual exclusions for their grandchildren because this is a direct skip trust.

C.    The beneficiaries of the trust were given an ascertainable standard to make withdrawals from the trust corpus.

D.    Spiros and Nicki can each use a portion of their unified credit to offset the gift tax when the policy is transferred into the trust, and they can allocate a portion of their GST tax exemption on their individual gift tax return to shelter any future GST taxes whenever distributions are made to the grandchildren.

6. Pam has a general POA over her mother’s assets. Which of the following statements are correct regarding the power? 1.    Pam can appoint her mother’s money to pay for her children’s education. 2.    Pam can appoint her mother’s money to pay her bills. 3.    Pam must only appoint money using an ascertainable standard (health, education, maintenance, support). 4.    If Pam were to die before her mother, Pam’s gross estate would include her mother’s assets although not previously appointed by Pam.

A.    1 only

B.    1 and 3

C.    1, 2 and 4

D.    1, 2 and 3 E.    1, 2, 3 and 4

Homework Answers

Answer #1

1. A,B,D = general power of appointment ; C = special power of appointment

2. If power of appointment is not exercised, the default provision takes over. Hence, $35,000

3. B. Yes, because Liz allowed her general power of appointment over the trust property to lapse.

5. D.    Spiros and Nicki can each use a portion of their unified credit to offset the gift tax when the policy is transferred into the trust, and they can allocate a portion of their GST tax exemption on their individual gift tax return to shelter any future GST taxes whenever distributions are made to the grandchildren.

6. All statements are correct. Hence, E.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Carol Crow, who was divorced and resident of Georgia, died on June 1. In the decedent's...
Carol Crow, who was divorced and resident of Georgia, died on June 1. In the decedent's safe deposit box, the executors of the estate found the following: (1) Securities valued at $30,000 on the date of death. These were registered in her name and her son's name as joint owners. Carol and her son purchased the securities in 2004 for $10,000. Each contributed $5,000 to the purchase. (2) Realty titles to a residence in Ohio valued at $4,550,000 and to...
So, how do banks “create” money? You’ll probably be surprised to learn that much of the...
So, how do banks “create” money? You’ll probably be surprised to learn that much of the cash in the money supply is somewhat illusory, “created” by the ability of banks to lend their deposits to other borrowers. Read the scenario below to understand how the process functions. How Does It Work: You’re going to start with $100 worth of cash money. You’ve decided to give that $100 to Ralph as a “gift” and suggest that he deposit it in the...
ATHI AND DARRIN LOVETTE CASE: Kathi and Darrin Lovette Background Kathi and Darrin Lovette, both age...
ATHI AND DARRIN LOVETTE CASE: Kathi and Darrin Lovette Background Kathi and Darrin Lovette, both age 63, have been married for 40 years, are both in good health, and they are citizens and residents of Louisiana. They expect to work until age 66 to 70. Kathi and Darrin live in a community property state. They have the following children and grandchildren: Children Age Grandchildren Elizabeth Age 40 4 children (ages 15, 14, 13 & 12) James Age 35 3 children...
Gender Bias in the Executive Suite Worldwide The Grant Thornton International Business Report (IBR) has described...
Gender Bias in the Executive Suite Worldwide The Grant Thornton International Business Report (IBR) has described itself as "a quarterly survey of business leaders from across the globe … surveying 11,500 businesses in 40 economies across the globe on an annual basis." 1 According to the 2011 IBR, the Asia Pacific region had a higher percentage (27 percent) of female chief executive officers (CEOs) than Europe and North America. Japan is the only Asia Pacific region exception. The report further...
Actually a HISTORY question: what tactics does Einhard use to portray Charlemagne in "Life of Charlemagne"...
Actually a HISTORY question: what tactics does Einhard use to portray Charlemagne in "Life of Charlemagne" and what tactics does Procipius use to describe Justinian in a positive light in the "Nika Riots"? Ive posted both excerpts. "Life of Charlemagne" Charles the Great, (Charlemagne in French) reigned 768-814 as king of the Franks and the most important ruler of the Carolingian Dynasty, conquering lands in what is now Germany, France, Spain, and Italy. On Christmas Day 800 C.E., Pope Leo...
Discuss ethical issues that can be identified in this case and the mode of managing ethics...
Discuss ethical issues that can be identified in this case and the mode of managing ethics Enron finds itself in this case. How would you describe the ethical culture and levels of trust at Enron? Provide reasons for your assessment. THE FALL OF ENRON: A STAKEHOLDER FAILURE Once upon a time, there was a gleaming headquarters office tower in Houston, with a giant tilted "£"' in front, slowly revolving in the Texas sun. The Enron Corporation, which once ranked among...
What role could the governance of ethics have played if it had been in existence in...
What role could the governance of ethics have played if it had been in existence in the organization? Assess the leadership of Enron from an ethical perspective. THE FALL OF ENRON: A STAKEHOLDER FAILURE Once upon a time, there was a gleaming headquarters office tower in Houston, with a giant tilted "£"' in front, slowly revolving in the Texas sun. The Enron Corporation, which once ranked among the top Fortune 500 companies, collapsed in 2001 under a mountain of debt...
What tools could AA leaders have used to increase their awareness of internal and external issues?...
What tools could AA leaders have used to increase their awareness of internal and external issues? ???ALASKA AIRLINES: NAVIGATING CHANGE In the autumn of 2007, Alaska Airlines executives adjourned at the end of a long and stressful day in the midst of a multi-day strategic planning session. Most headed outside to relax, unwind and enjoy a bonfire on the shore of Semiahmoo Spit, outside the meeting venue in Blaine, a seaport town in northwest Washington state. Meanwhile, several members of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT