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
Which estate planning tool allows a donor to transfer assets to a trust, receive an annuity payment for a fixed term, and pass remaining assets to heirs with reduced gift tax?
Answer: Grantor Retained Annuity Trust (GRAT)
A GRAT allows the grantor to receive fixed annuity payments for a term, with any remaining assets passing to heirs potentially free of gift tax if the IRS hurdle rate is exceeded.
Under current U.S. law, what is the federal estate tax exemption amount per individual for 2024?
Answer: $13.61 million
For 2024, the federal estate and gift tax exemption is $13.61 million per individual, indexed for inflation annually.
A philanthropic advisor recommends a testamentary charitable bequest. Which document is used to make this gift?
Answer: Last will and testament
A testamentary charitable bequest is made through a last will and testament and takes effect at the donor's death.
Which strategy allows a high-net-worth donor to remove life insurance proceeds from their taxable estate while still funding a charity at death?
Answer: Irrevocable Life Insurance Trust (ILIT) with charity as beneficiary
An ILIT removes the policy from the insured's taxable estate, and naming the charity as beneficiary directs proceeds to philanthropy at death.
What is the primary purpose of a 'pour-over will' in an estate plan that includes a revocable living trust?
Answer: To transfer probate assets into the revocable trust at death
A pour-over will directs any assets not already in the revocable trust at death to 'pour over' into that trust, ensuring a unified distribution plan.
A couple wishes to reduce estate taxes while benefiting a charity. Which technique involves transferring a home to a trust, retaining the right to live there, and donating the remainder interest to charity?
Answer: Retained Life Estate
A retained life estate allows the donor to deed a personal residence to a charity while retaining the right to use it for life, generating a current charitable deduction.