|Estate Planning Law Specialist
The following are sample questions designed to assist an EPLS applicant in understanding the nature, type, and complexity of questions on the exam. You will note that most of these questions are estate and gift tax related. Others are planning related. The actual exam also has ethics related questions.
Unless stated, assume a 2001 date of death or gift, whichever is applicable, and assume a Section 7520 rate of 7%. On the actual exam, you will be given any applicable tables from the Code or Regulations. For this sample, use the current tables in the Regs issued under §2031 (Table S, April 30, 1999 and Table B, April 30, 1989).
H died on January 5. H died owning 100 shares of General Motors stock. On his date of death, GM stock opened at $44 per share. During the day, it went to a high of $46 and a low of $38. At closing, GM was last traded at $40 per share. Had H desired to sell his 100 shares of GM stock, the brokerage commission would have been $50. What is the value of the 100 shares of the General Manager stock included in H’s gross estate?
The Executor of D’s estate decided to value the gross estate using the alternate valuation date pursuant to Internal Revenue Code § 2032. The Executor is unsure of how to value several of the assets that were included in D’s gross estate. These assets are as follows:
The stocks were distributed to D’s sole beneficiary three months after D’s death when they were worth $35,000. The residence was sold to an unrelated party five month’s after D’s death for $270,000. If the Executor elects to use the alternate valuation date and the estate is eligible for the election, the gross estate is:
Husband and Wife make maximum annual exclusion gifts each year to their son and to their only grandchild. They do not make gifts to their son’s wife because they do not trust her not to immediately spend it on herself. The grandson has just enrolled at a very expensive Ivy League college and they have asked you what is the best way to provide some help with the costs. You would advise them that the simplest solution is:
H and W (husband and wife) maintain a joint checking account, each having deposited their own monies into this account. On December 25 of last year, W wrote a check to their daughter in the amount of $20,000 and gave the daughter the check as a gift on Christmas Day. The daughter deposited the check the next day and it cleared H’s and W’s account by year end. No other gifts were made during the year. H and W did not file a gift tax return for the last year. The amount of W’s taxable gift for the last year is:
You are preparing an estate plan for John who was divorced and has solely owned assets of $3,200,000. In addition to his solely owned assets, John has voluntarily begun putting assets aside for his son, Jason. The transfers were made over a number of years and none exceeded the annual gift tax exclusion under § 2503. The transferred assets were in an account titled, “John, Custodian for Jason, Uniform Transfers to Minors Act (UTMA).” As of this date, the UTMA account contains $100,000 and Jason is 10 years old. Which of the following is correct?
A testamentary trust established under T’s Will provides that all of the trust income be paid to T’s spouse for life, remainder to T’s children. XYZ Bank is Trustee. No principal payments can be made. The Trustee of this trust was empowered to use the income of the trust to pay for the medical expense for T’s mother. When T executed his Will, his mother was 78 and in frail health. T’s mother died while T was alive. T never changed his Will. The trust came into existence at the time of T’s death. Which of the following statements concerning T’s estate is correct?
You are assisting in the estate plan for Jane. She has solely owned assets of $3,500,000. In reviewing Jane’s income tax returns, you find that she had been receiving substantial income from a trust established by her grandfather in 1950 when Jane was 20 years old. XYZ Bank was the initial Trustee and upon reaching age 30, Jane became her own Trustee. The trust directed that all of the net income be distributed to Jane during her lifetime as well as principal, if needed in the Trustee’s reasonable discretion, to provide for Jane’s “health, support and medical care.” The principal value of the trust is $2,000,000. No distributions of principal have been made. Which of the following is correct with respect to possible inclusion of the trust established by her grandfather in Jane’s estate for federal estate tax purposes?
In 1998, a father established a funded irrevocable trust for the benefit of his daughter. The daughter is to receive all trust income for life. At her death, the property will be distributed to her only child, an adult son. Which of the following powers, if included in the trust instrument, would cause the entire trust corpus to be included in daughter’s gross estate for federal estate tax purposes?
H is married to W. H makes a gift of Z stock to W that has a fair market value of $90,000 on the date of the gift and a basis of $190,000. One year later, H dies and the stock has a fair market value of $80,000. Six months thereafter, W sells the Z stock she received from H for $100,000. W’s gain or loss for income tax purposes on the sale of Z stock is: