- Trusts and Estates Law
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- Trusts: Asset Protection Trusts
Trusts: Asset Protection Trusts
| Description: This quiz will test your knowledge on the topic of Trusts: Asset Protection Trusts. | |
| Number of Questions: 14 | |
| Created by: Aliensbrain Bot | |
| Tags: trusts asset protection estate planning |
What is the primary purpose of an Asset Protection Trust (APT)?
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To protect assets from creditors
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To reduce estate taxes
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To provide for the care of a disabled individual
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To establish a charitable foundation
An APT is a type of trust that is designed to protect the assets of the grantor from creditors. This can be done by placing the assets in a trust that is separate from the grantor's personal assets.
Which of the following is not a common type of APT?
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Domestic Asset Protection Trust (DAPT)
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Offshore Asset Protection Trust (OAPT)
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Spendthrift Trust
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Totten Trust
A Totten Trust is a type of trust that is created when a person deposits money into a bank account in the name of another person. This type of trust is not typically used for asset protection purposes.
What is the main difference between a DAPT and an OAPT?
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DAPTs are created in the United States, while OAPTs are created in a foreign country.
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DAPTs are irrevocable, while OAPTs are revocable.
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DAPTs are taxed more favorably than OAPTs.
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DAPTs are more difficult to create than OAPTs.
DAPTs are created under the laws of the United States, while OAPTs are created under the laws of a foreign country. This can have a significant impact on the validity and enforceability of the trust.
What is a Spendthrift Trust?
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A trust that is designed to protect the assets of the grantor from creditors
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A trust that is designed to provide for the care of a disabled individual
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A trust that is designed to reduce estate taxes
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A trust that is designed to establish a charitable foundation
A Spendthrift Trust is a type of trust that is designed to protect the assets of the grantor from creditors. This is done by placing the assets in a trust that is separate from the grantor's personal assets and by restricting the beneficiary's ability to access the assets.
What is the rule against perpetuities?
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A rule that states that a trust cannot last for more than 21 years after the death of the grantor
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A rule that states that a trust cannot last for more than 100 years after the creation of the trust
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A rule that states that a trust cannot last for more than 50 years after the death of the last beneficiary
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A rule that states that a trust cannot last for more than 30 years after the creation of the trust
The rule against perpetuities is a common law rule that states that a trust cannot last for more than 21 years after the death of the grantor. This rule is designed to prevent trusts from being used to tie up assets indefinitely.
What is the difference between a revocable trust and an irrevocable trust?
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A revocable trust can be changed or terminated by the grantor, while an irrevocable trust cannot.
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A revocable trust is taxed more favorably than an irrevocable trust.
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A revocable trust is more difficult to create than an irrevocable trust.
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A revocable trust is more expensive to create than an irrevocable trust.
A revocable trust is a type of trust that can be changed or terminated by the grantor at any time. An irrevocable trust, on the other hand, cannot be changed or terminated by the grantor once it has been created.
What is a self-settled trust?
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A trust that is created by a person for their own benefit
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A trust that is created by a person for the benefit of another person
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A trust that is created by a court of law
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A trust that is created by a government agency
A self-settled trust is a type of trust that is created by a person for their own benefit. This type of trust is often used for asset protection purposes.
What is a Crummey trust?
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A type of trust that is used to make gifts to minors
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A type of trust that is used to provide for the care of a disabled individual
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A type of trust that is used to reduce estate taxes
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A type of trust that is used to establish a charitable foundation
A Crummey trust is a type of trust that is used to make gifts to minors. This type of trust allows the grantor to make gifts to the trust without having to pay gift tax.
What is a generation-skipping transfer tax (GSTT)?
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A tax that is imposed on transfers of property from one generation to another
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A tax that is imposed on transfers of property from a living person to a deceased person
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A tax that is imposed on transfers of property from a deceased person to a living person
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A tax that is imposed on transfers of property from a trust to a beneficiary
A GSTT is a tax that is imposed on transfers of property from one generation to another. This tax is designed to prevent wealthy families from avoiding estate taxes by transferring assets to their children or grandchildren.
What is a qualified personal residence trust (QPRT)?
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A type of trust that is used to hold a personal residence
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A type of trust that is used to provide for the care of a disabled individual
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A type of trust that is used to reduce estate taxes
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A type of trust that is used to establish a charitable foundation
A QPRT is a type of trust that is used to hold a personal residence. This type of trust allows the grantor to transfer the residence to the trust while retaining the right to live in the residence for a specified period of time.
What is a grantor retained annuity trust (GRAT)?
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A type of trust that is used to make gifts to minors
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A type of trust that is used to provide for the care of a disabled individual
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A type of trust that is used to reduce estate taxes
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A type of trust that is used to establish a charitable foundation
A GRAT is a type of trust that is used to reduce estate taxes. This type of trust allows the grantor to transfer assets to the trust while retaining the right to receive a fixed annuity payment for a specified period of time.
What is a charitable lead trust (CLT)?
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A type of trust that is used to make gifts to minors
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A type of trust that is used to provide for the care of a disabled individual
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A type of trust that is used to reduce estate taxes
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A type of trust that is used to establish a charitable foundation
A CLT is a type of trust that is used to establish a charitable foundation. This type of trust allows the grantor to transfer assets to the trust while retaining the right to receive a fixed annuity payment for a specified period of time. After the specified period of time, the assets in the trust are distributed to the charitable foundation.
What is a charitable remainder trust (CRT)?
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A type of trust that is used to make gifts to minors
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A type of trust that is used to provide for the care of a disabled individual
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A type of trust that is used to reduce estate taxes
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A type of trust that is used to establish a charitable foundation
A CRT is a type of trust that is used to reduce estate taxes. This type of trust allows the grantor to transfer assets to the trust while retaining the right to receive a fixed annuity payment for a specified period of time. After the specified period of time, the assets in the trust are distributed to the charitable remainder beneficiary.
What is a dynasty trust?
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A type of trust that is designed to last for multiple generations
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A type of trust that is designed to provide for the care of a disabled individual
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A type of trust that is designed to reduce estate taxes
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A type of trust that is designed to establish a charitable foundation
A dynasty trust is a type of trust that is designed to last for multiple generations. This type of trust is often used to transfer wealth from one generation to the next without having to pay estate taxes.