If a Trust Qualifies as a Spousal Trust, Which of the Following

question 4

Multiple Choice

If a trust qualifies as a spousal trust, which of the following is FALSE?

• A) In many situations, the assets in the trust remain tax-free until the death of the surviving spouse due to the waiver of the 21-year rule at the first 21-year anniversary.
• B) Property is deemed to have been sold at its cost amount when transferred to the trust.
• C) Both the spouse and any adult children can receive the capital of the trust prior to the settlor's death.
• D) Upon the death of the surviving spouse, the trust property is deemed to be sold at market value.

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Definitions:

Market Value

The current price at which an asset or service can be bought or sold in a marketplace.

Split-off

A point in the production process in a joint production system where two or more products become individually identifiable and their costs can be separately allocated.

Production Work

The tasks and activities involved in manufacturing products, including assembly and processing materials.

Assembly Line

A manufacturing process in which parts are added to a product in a sequential manner to create a finished product efficiently.