10 exam-style questions with answers and explanations, straight from our 1,030-question bank. Tap an answer to check yourself. When you're ready, take the scored version in the free practice test.
Elena wants assets passing at her death to support her husband, a U.S. citizen, while preserving the remaining principal for her children from an earlier marriage. Her husband must receive all trust income at least annually but must not be able to redirect the remainder. Elena also wants a federal estate-tax marital deduction for the assets used to fund this arrangement. Which structure achieves these objectives?
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Correct answer: C - A QTIP trust with the required election and Elena's children as remainder beneficiaries.
Question 2
During 2026, an unmarried U.S.-citizen grandmother gives her adult grandson $42,000 in cash. She also pays his accredited university $31,000 for tuition and $9,000 for room and board, paying the university directly in both cases. She makes no other gifts to him that year. What is her total taxable gift to this grandson after the applicable exclusions, before applying her available lifetime gift-tax credit?
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Correct answer: B - $32,000
Question 3
In September 2026, Martin, age 46, reviews the traditional IRA he inherited directly from his father, who died at age 81 in 2025 after his required beginning date. His father completed the 2025 required minimum distribution. Martin is the sole beneficiary and is neither disabled nor chronically ill. He has made no withdrawals and plans to leave the account untouched until 2035. What correction does his distribution plan require?
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Correct answer: D - Take annual beneficiary RMDs beginning in 2026 and empty the account by December 31, 2035.
Question 4
A policyholder with severe cognitive impairment can still bathe, dress, eat, toilet, transfer, and maintain continence without assistance. Last month, a licensed health-care practitioner certified that she requires substantial supervision to protect her from threats to health and safety. Her tax-qualified long-term-care policy covers the proposed supervised care, and its elimination period has been satisfied. On what basis should her benefits claim proceed?
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Correct answer: A - The cognitive-impairment route, without requiring loss of two activities of daily living.
Question 5
Before committing to a seller-financed family-business buyout, an owner reviews three measures: a current ratio of 2.4, a 30% increase in EBITDA, and a debt-service coverage ratio of 0.82. The last measure equals cash available for debt service divided by scheduled principal and interest on existing debt; it excludes the proposed buyout payments. Which finding matters most to the proposed payment schedule?
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Correct answer: D - Existing debt service exceeds available cash, before adding the proposed buyout payments.
Question 6
Parents are revising their wills to provide lifelong supplemental support for their 32-year-old daughter, who receives means-tested SSI and Medicaid. The intended inheritance consists entirely of the parents' property. They want enforceable trustee duties and want any remainder to pass to their son without a first-party Medicaid-payback requirement. Counsel will ensure that the daughter's rights do not make the trust a countable resource. Which arrangement fits?
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Correct answer: C - Leave the assets directly to a third-party discretionary supplemental-needs trust for their daughter.
Question 7
A U.S. citizen died on May 20, 2024, survived by his wife. His estate was not required to file Form 706 based on its gross estate and adjusted taxable gifts, and no estate-tax return was filed. In September 2026, his executor discovers that electing portability would benefit the surviving wife. No refund claim or other limitation issue is involved. What is the most direct available route to preserve the deceased spousal unused exclusion?
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Correct answer: C - File a complete Form 706 with the required election notation under Revenue Procedure 2022-32 by the fifth anniversary of death.
Question 8
A trust officer is asked to wire a large discretionary distribution to an 82-year-old beneficiary's new companion. During a call, the companion answers every question and refuses a private conversation. The beneficiary says, 'I do not understand what I am signing.' The wire has not been authorized, and the officer may defer it during a suspected-exploitation review. What should the officer do before releasing funds?
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Correct answer: D - Pause the wire, document the concerns, and begin safeguarding review with private beneficiary contact and any required reporting.
Question 9
A donor wants lifetime payments that vary with the annual value of a charitable remainder trust and wants to make additional contributions later. An actuary has verified the remainder percentages in four proposals. All requirements other than the listed payout, remainder value, and ability to accept additions are satisfied. Which proposal meets both the donor's instructions and federal charitable remainder trust requirements?
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Correct answer: D - A 6% charitable remainder unitrust with a 28% actuarial charitable remainder.
Question 10
A grandmother established an irrevocable trust for her daughter and grandson. The daughter remains a beneficiary when the trustee makes a distribution to the grandson in 2026; no trust interest terminates. The grandmother's daughter, who is the grandson's mother, is alive. The trust's established generation-skipping transfer (GST) inclusion ratio is 0.25, and the distribution's statutory taxable amount is $300,000. The trustee will not pay GST tax on the recipient's behalf. With a 40% maximum federal estate-tax rate, who owes the GST tax and how much?
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Correct answer: B - The grandson owes $30,000.
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