A Trust That Gives the Individual Establishing the Trust the Ability

question 34

Multiple Choice

A trust that gives the individual establishing the trust the ability to direct income from the trust to his or her spouse over the spouse's life,and then,at the spouse's death,to choose to whom the assets go is called a

• A)sprinkling trust.
• B)Q-TIP.
• C)A-B trust.
• D)credit-shelter trust.
• E)unified credit trust.

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Definitions:

Required Rate Of Return

The minimum annual percentage earned by an investment that will induce individuals or companies to put money into a particular security or project.

Reinvestment Rate Risk

Reinvestment Rate Risk is the risk that the returns from reinvesting cash flows will be lower than initially anticipated due to changes in interest rates.

Annual Interest Payment

The total amount of interest paid on a bond or loan over the course of a year.

Coupon Rate

The percent of the face value paid as interest on a bond every year.