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LGS Exam 1 Practice Test Answers verified already passed
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LGS Exam 1 Practice Test Answersverified already passed
Arthur and Doris are married and bought a lake house in 1980 for $50,000. Arthur paid $35,000 and
Doris paid $15,000. They titled the property as Joint tenants with right of survivorship. By 2022 the
house was worth $400,000. For income, gift, and estate tax purposes, how much of the property will
each spouse retain as their original basis? - correct answer ✔✔Arthur will retain $25,000 and so will
Doris
John and George (brothers) purchase a piece of property in 2003 for $50,000 and title it as joint tenants
with right of survivorship. They sell the property in 2022 for $400,000. How much capital gain will they
have to each report on their income tax returns next year? - correct answer ✔✔John and George will
have to report $175,000 each
Susan bought a condo for $300,000 for her son Joe to live in while he attends grade school. She titled the
property jointly with right of survivorship and has paid for all home maintenance expenses and taxes.
Assume Susan dies today when the condo is valued at $500,000. How much, if any, of the condo will be
valued in Susan's estate? - correct answer ✔✔$500,000
Jack and Jill are married. At the time of Jack's death, they owned a house as joint tenants worth
$2,000,000. In Jacks name only are municipal bonds worth $1,000,000 and $3,000,000 in a revocable
trust with Jill as beneficiary. What is the amount of Jack's gross estate? - correct answer ✔✔$5,000,000
(1/2 value of house, all of bonds, all of revocable trust)
Using the facts from question 4 above, what is the amount of Jack's probate estate? - correct answer
✔✔$1,000,000 (only the bonds, the other two pass automatically by operation of law)
Joe Jonas dies intestate leaving a wife and their two sons. His estate is worth $200,000 after taxes. How
will Joe's property be divided? - correct answer ✔✔Spouse takes $125,000, sons take $37,500 each
What if Joe's sons are killed at the same time he dies, and his parents are still living at his death along
with his spouse. How would his estate divide? - correct answer ✔✔Spouse gets $150,000, parents get
$50,000
, What if one of Joe's two sons is not the son of his surviving spouse. How would his estate divide? -
correct answer ✔✔Spouse gets $100,000, sons get $50,000 each
Which assets go through probate?
residence owned as tenancy by entirety, brokerage account payable on death to surviving spouse, POD
account, life insurance policy payable to surviving spouse. - correct answer ✔✔None. They all
automatically pass because they are titled to do so.
Sam has a life insurance policy for $2 M naming his wife, Jennifer as the designated beneficiary. If Sam
dies, the $2 M death benefit will pass to Jennifer by - correct answer ✔✔contract
Jack and Jill own a mountain home together as tenants in common. Last week Jack was killed in a skiing
accident. Jack's wife survives him, and she hopes to inherit Jack's interest in the house. Jack's interest in
the mountain home will pass to her by - correct answer ✔✔Probate
Before Steve was killed, he transferred a stock account he owned worth $4 M into a revocable trust.
These assets will pass to the beneficiaries of the trust by - correct answer ✔✔operation of law
Sherry left a will that includes a testamentary trust for funds held in her stock account worth $6 M, the
assets will pass to the beneficiaries by - correct answer ✔✔Probate (assets left by will to a testamentary
trust must go through probate)
Alexis and John lived in a common-law state and titles their marital assets in John's name. John died
shortly after they moved to a pure-community property state. Which of the following is the most
accurate statement of how ownership will now be treated? - correct answer ✔✔Since the assets were in
John's name to begin with in a common law state, they will always be considered his separate assets in a
pure community property state
Candy and Morris live in Alaska (CP state). Morris purchases a $1 M life insurance policy on his life and
names his daughter Cindy the beneficiary. Morris pays the insurance premium with marital assets. At
Morris's death, $1 M death benefits are paid to Cindy. How much of the proceeds will be included in
Morris's gross easter, subject to estate tax? - correct answer ✔✔one-hand the death benefit $500,000
(since the life insurance policy is purchased with CP assets, 1/2 the death benefit is owned by each
spouse, 1/2 will be included in Morris's gross estate
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