ChFC Estate Planning Practice Questions

Correct answer: A. It directs any assets not titled in the trust at death into the trust, though those assets typically must pass through probate first.

A pour-over will acts as a safety net, catching any assets that were never retitled into the trust (or acquired shortly before death and not yet transferred) and directing them into the trust at death. Because these assets are typically still held in the decedent's individual name, they generally must pass through probate before being poured into the trust. The pour-over will does not itself avoid probate for those assets.

• AA. A pour-over will acts as a safety net, directing any assets left outside the trust at death into the trust. But those probate assets typically must pass through the probate process first before reaching the trust.
• BB. A pour-over will doesn't allow assets to bypass probate; the assets it captures are in the decedent's individual name and generally must go through probate before reaching the trust.
• CC. A pour-over will can capture any probate asset titled in the decedent's individual name, including financial accounts, not just tangible personal property.
• DD. A pour-over will doesn't revoke the trust; it complements the trust by directing stray assets into it.

• Source: Exam outline: The American College ChFC designation (courses), accessed October 2026

Correct answer: A. Compare gift carryover basis with potentially available basis adjustment at death, estate exposure and diversification risk

A lifetime gift generally carries over the donor's basis, while property included in the estate may receive a basis adjustment at death. The comparison must also weigh estate tax exposure and the risk of holding a concentrated position.

• AA. Weighs carryover versus adjusted basis alongside estate tax and diversification, which is the full comparison.
• BB. Gifted property generally keeps the donor's basis (carryover), not a fair-market-value basis.
• CC. Inherited property generally receives a basis adjustment, so holding to death can matter a great deal.
• DD. Treating the gain tax as secondary ignores the basis difference that is central to a low-basis position.

• Source: IRC section 1015 (basis of property acquired by gift), accessed October 2026
• Source: IRC section 1014 (basis of property acquired from a decedent), accessed October 2026

Correct answer: B. It can jeopardize benefits eligibility, warranting specialized trust and public-benefits advice

Means-tested benefits count countable assets, so a large direct inheritance can disqualify an adult child. A properly designed special-needs trust, reviewed with public-benefits counsel, can supplement support without losing eligibility.

• AA. An inheritance does not replace disability or benefits planning; the eligibility problem remains.
• BB. Direct assets can push the child over resource limits, so specialized planning is needed.
• CC. Assets are not generally disregarded for a short period; countable resources can affect eligibility.
• DD. An inheritance has nothing to do with creating an employer plan.

• Source: 42 U.S.C. § 1382b, accessed October 2026
• Source: 42 U.S.C. § 1382, accessed October 2026

Correct answer: D. $150,000, stepped up to the fair market value at the date of death

Under IRC Section 1014, property acquired from a decedent generally receives a step-up (or step-down) in basis to its fair market value on the date of death. The daughter's basis becomes $150,000, eliminating the built-in gain that existed during her father's lifetime. This differs from lifetime gifts, which carry over the donor's original basis under Section 1015.

• AA. Carryover basis from the decedent's original cost applies to lifetime gifts, not to property acquired from a decedent's estate, which instead receives a stepped-up basis.
• BB. Inherited property is not given a zero basis. It receives a stepped-up basis equal to fair market value at death.
• CC. There is no rule averaging the original cost and the date-of-death value, simple or otherwise; the applicable rule is a full step-up to date-of-death fair market value.
• DD. Correct. Property acquired from a decedent generally receives a basis equal to its fair market value on the date of death. Here, $150,000, eliminating the built-in gain that existed during the father's lifetime.

• Source: IRC section 1014 (basis of property acquired from a decedent), accessed October 2026

Correct answer: B. To convert the gift from a future interest into a present interest, which is required to qualify for the annual gift tax exclusion

The annual gift tax exclusion applies only to gifts of a present interest. Contributions to an irrevocable trust would otherwise be a gift of a future interest. Crummey withdrawal rights give beneficiaries a temporary right to withdraw the contribution, converting the gift into a qualifying present interest.

• AA. Crummey powers don't make the trust revocable; ILITs remain irrevocable to keep insurance proceeds out of the grantor's estate.
• BB. Correct. Crummey powers convert an otherwise future-interest gift into a present interest, satisfying the annual exclusion requirement.
• CC. The goal of an ILIT is the opposite. Keeping the death benefit out of the grantor's gross estate, so inclusion would not serve any purpose of the Crummey power.
• DD. Gifts to a trust with Crummey powers may still require a gift tax return (Form 709) to report the gift and claim the exclusion.

• Source: IRC section 2503 (taxable gifts; annual exclusion), accessed October 2026

Correct answer: C. The payments are not gifts, and they let the trust grow without being reduced by income tax

Under Rev. Rul. 2004-64, a grantor's payment of income tax on grantor trust income is her own tax liability and is not a gift to the beneficiaries. This effectively lets the trust compound free of income tax, enhancing the estate-freeze benefit.

• AA. The grantor is paying her own tax liability, which the IRS does not treat as a gift.
• BB. The payments are not gifts at all, so the annual exclusion is irrelevant.
• CC. This matches Rev. Rul. 2004-64 and explains why IDGTs are popular for estate freezes.
• DD. There is no loan or repayment requirement; the tax is the grantor's obligation by statute.

• Source: Exam outline: The American College ChFC designation (courses), accessed October 2026