The Ultimate Estate Freeze Trusts Quiz
by Staff
Estate Freeze Trusts are complicated plans to minimize tax liability and transfer family businesses and farm assets to the next generation. Although you would want to consult a professional about this type of trust, knowing how these trusts work can help you make a good decision when estate planning. Take this quiz to see how much you know about Estate Freeze Trusts.

What is a succession plan?

  • a plan for success
  • a plan for the next generation
  • a plan for budgeting

What types of businesses should create an Estate Freeze Trust?

  • family businesses
  • family farms
  • both answers

What year did the Internal Revenue Service add provision Chapter 14?

  • 1990
  • 2000
  • 2005

What is an annuity?

  • payments of a specific amount
  • a type of stock investment
  • a certificate of deposit

What is preferred stock?

  • stock without voting rights
  • stock that may pay a dividend
  • both answers

How do common stock and preferred stock differ?

  • Common stockholders have voting rights.
  • Preferred stockholders have voting rights.
  • Neither share conveys voting rights.

What are dividends?

  • payments to stockholders
  • interest payments
  • tax liability

Which type of business incurs the highest gift and estate tax rates?

  • family-owned businesses
  • non-profit businesses
  • chapter S corporations

In a Grantor Retained Annuity Trust, who does the trust creator give the property to?

  • beneficiaries
  • trustee
  • the trust

What is a unitrust?

  • payments over time
  • lump sum payment
  • liability

Which trust may be a red flag for the Internal Revenue Service?

  • Intentionally Defective Grantor Trusts
  • Grantor Retained Annuity Trust
  • Irrevocable Life Insurance Trust

Who can advise you about estate and trust matters?

  • trust and estate attorney
  • accountant
  • bank representative

What is a tax liability?

  • taxes owed
  • tax receipts
  • tax refund

How long do you need to own a stock for it to be considered long-term?

  • one year
  • less than one year
  • more than one year

What is a short-term stock transaction?

  • stocks owned for one year or less
  • stocks owned for more than one year
  • stocks owned for more than five years

If you have an Intentionally Defective Grantor Trust (IDGT), who will pay the beneficiaries' income taxes?

  • the beneficiaries
  • the trust creator
  • the trustee

How are installment sales used in an Estate Freeze Trust?

  • payments over time
  • depreciating assets
  • lump sum payment

What is a trust?

  • a managed investment account
  • a relationship where one party holds assets for another
  • an arrangement where all the business decisions are made by one person

Why would a family business need to sell assets in the event of a death in the family?

  • to pay taxes
  • to pay funeral costs
  • to pay employees

For small family businesses, what organization could be a source for information?

  • Small Business Administration
  • Internal Revenue Service
  • Federal Deposit Insurance Corporation