Practice Test Geeks(CAP) Certified Philanthropic Advisor Practice Test
← All CAP Flashcard Decks

CAP Estate Planning & Wealth Transfer Flashcards

6 cards from real CAP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 CAP Estate Planning & Wealth Transfer flashcards as text

  1. Which of the following best describes 'portability' in the context of federal estate planning?

    Answer: A surviving spouse's ability to use the deceased spouse's unused estate tax exemption

    Portability allows a surviving spouse to elect to use any unused federal estate tax exemption from the deceased spouse, effectively doubling the shelter available.

  2. A donor transfers appreciated farmland to a Charitable Remainder Trust. What is a key income tax benefit at the time of transfer?

    Answer: The donor receives a partial charitable deduction for the present value of the remainder interest

    When funding a CRT, the donor receives an income tax deduction equal to the IRS-calculated present value of the remainder interest passing to charity.

  3. In estate planning, what does 'step-up in basis' mean for inherited assets?

    Answer: The heir's cost basis is reset to the fair market value at the decedent's date of death

    Inherited assets receive a stepped-up basis equal to the fair market value on the date of death, eliminating capital gains tax on pre-death appreciation.

  4. A philanthropic advisor suggests using IRD (Income in Respect of a Decedent) assets for charitable bequests. What is the primary reason for this strategy?

    Answer: IRD assets such as traditional IRAs are subject to both estate and income tax, making them most tax-efficient to leave to charity

    IRD assets like traditional IRAs are taxable as ordinary income when received by individual heirs but are income-tax-free when paid to a qualifying charity.

  5. Which of the following is NOT a characteristic of a Grantor Retained Unitrust (GRUT)?

    Answer: The grantor receives a fixed dollar annuity regardless of trust performance

    A GRUT pays a fixed percentage of the trust's annually revalued assets, so payouts vary with performance—unlike a GRAT, which pays a fixed dollar annuity.

  6. What is the annual federal gift tax exclusion amount per recipient for 2024?

    Answer: $18,000

    For 2024, the annual gift tax exclusion is $18,000 per donor per recipient, allowing tax-free transfers up to that amount without reducing the lifetime exemption.