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Chartered Life Underwriter (CLU) Estate Planning Fundamentals Flashcards
62 question-and-answer cards covering Estate Planning Fundamentals as it is examined in Chartered Life Underwriter (CLU). 24 of them are printed below, taken from across the deck — no signup, no paywall on the preview.
24 sample cards from the Estate Planning Fundamentals deck
Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.
What is the generation-skipping transfer (GST) tax?
A separate flat tax (at the highest estate tax rate, 40%) imposed on transfers to 'skip persons' (e.g., grandchildren) that skip a generation, preventing avoidance of transfer tax at the intervening generation.
Who is a 'skip person' for GST purposes?
A person two or more generations below the transferor (such as a grandchild), or a trust in which all interests are held by skip persons.
Name the three types of generation-skipping transfers.
Direct skips, taxable distributions, and taxable terminations.
What is the GST exemption?
A separate exemption (equal to the estate/gift basic exclusion amount, $13.99 million in 2025) that can be allocated to transfers to shelter them from GST tax.
What are the essential parties to a trust?
The grantor (settlor/trustor) who creates and funds it, the trustee who holds legal title and manages the property, and the beneficiaries who hold equitable/beneficial interests.
How does a revocable trust differ from an irrevocable trust for estate tax?
Assets in a revocable trust remain in the grantor's gross estate (the grantor retains control). A properly structured irrevocable trust removes assets from the grantor's estate because control is relinquished.
What is the primary estate-planning benefit of a revocable living trust?
It avoids probate and provides incapacity management and privacy, but it provides no estate tax savings or creditor protection while the grantor is living.
What is a bypass (credit shelter / B) trust and its purpose?
An irrevocable trust funded at the first spouse's death with the exemption amount; it provides for the surviving spouse but is excluded from the survivor's estate, preserving the first spouse's exemption.
What is a QTIP (marital / C) trust?
A Qualified Terminable Interest Property trust that pays all income to the surviving spouse for life and qualifies for the marital deduction, while letting the first spouse control the ultimate disposition of the remainder.
What is an Irrevocable Life Insurance Trust (ILIT) and what does it accomplish?
An irrevocable trust that owns a life insurance policy so the death proceeds are excluded from the insured's gross estate, providing estate-tax-free liquidity to pay taxes or benefit heirs.
What is a Crummey power and why is it used in an ILIT?
A beneficiary's temporary right to withdraw contributions to the trust, which converts the gift into a present interest so it qualifies for the annual gift tax exclusion (covering premium payments).
What is the three-year lookback rule for transferred life insurance?
If an insured transfers an existing policy (or incidents of ownership) and dies within three years, the death proceeds are pulled back into the gross estate. New policies bought directly by an ILIT avoid this.
Name three specialized trusts and their purposes.
Special needs trust (provides for a disabled beneficiary without disqualifying them from government benefits); QPRT (transfers a residence at a discounted gift value); GRAT/CRAT/charitable trusts (income/remainder split-interest planning).
What are the common sources of estate liquidity?
Cash and marketable securities, life insurance proceeds, sale of assets, loans, installment payment of estate tax under IRC Section 6166, and Section 303 stock redemptions.
What does IRC Section 6166 provide?
It allows the estate tax attributable to a closely held business interest to be paid in installments (interest-only for up to 5 years, then up to 10 annual installments) when the business exceeds 35% of the adjusted gross estate.
What is a Section 303 stock redemption?
A provision allowing a corporation to redeem a deceased shareholder's stock and have the proceeds treated as a sale (capital gain/return of basis) rather than a dividend, to the extent of estate taxes and administration costs, providing liquidity.
What is a Charitable Remainder Trust (CRT)?
An irrevocable split-interest trust that pays income to the donor/beneficiaries for life or a term, with the remainder passing to charity; it provides an income stream, a current charitable deduction, and capital-gains deferral.
What is the difference between a CRAT and a CRUT?
A Charitable Remainder Annuity Trust pays a fixed dollar amount (fixed percentage of initial value) with no additional contributions. A Charitable Remainder Unitrust pays a fixed percentage of the trust's annually revalued assets and permits additional contributions.
What is a Charitable Lead Trust (CLT)?
A split-interest trust that pays income to a charity for a term, after which the remainder passes to noncharitable beneficiaries (often family), reducing transfer taxes on the remainder; it is essentially the reverse of a CRT.
What is a donor-advised fund?
A charitable account at a sponsoring organization to which a donor makes an irrevocable contribution (deductible now) and later recommends grants to charities over time.
What is the general rule for valuing assets in the gross estate?
Assets are valued at fair market value on the date of death, defined as the price a willing buyer and willing seller would agree upon, neither under compulsion and both with reasonable knowledge of the facts.
What is the alternate valuation date (AVD)?
An election to value the gross estate six months after death; it is available only if it reduces both the gross estate value and the estate tax. Assets sold/distributed before then are valued on the disposition date.
What is special use valuation under IRC Section 2032A?
An election allowing qualifying farm or closely held business real property to be valued at its actual (current) use rather than highest-and-best use, reducing the gross estate up to an indexed limit.
What valuation discounts commonly apply to closely held business interests?
Discounts for lack of marketability (no ready market) and lack of control/minority interest, which reduce the value of fractional or non-controlling interests in the gross estate or for gifting.
What this deck covers
The Estate Planning Fundamentals deck follows the Chartered Life Underwriter (CLU) Estate Planning Fundamentals syllabus — 5 chapters and 19 topics — so questions land on material that is genuinely examinable rather than trivia around it. That works out to roughly 12.4 cards per chapter.
Answers are written to be recallable, not just readable — averaging about 197 characters, which is long enough to carry the reasoning and short enough to say out loud.
A deck like this earns its keep on the second and third pass. Read the syllabus first so you know the shape of the subject, then use the cards to find the specific facts that have not stuck.
Estate Planning Fundamentals flashcards FAQ
How many Estate Planning Fundamentals flashcards are in this Chartered Life Underwriter (CLU) deck?
62 cards. This page previews 24 of them, sampled evenly across the deck so you can judge the difficulty before installing anything.
Are these Chartered Life Underwriter (CLU) flashcards free?
Yes. The preview here is free to read with no signup, and the full 62-card deck is free inside the Examius app.
What do the Estate Planning Fundamentals cards cover?
They follow the Chartered Life Underwriter (CLU) Estate Planning Fundamentals syllabus — 5 chapters and 19 topics — so the questions track what is actually examinable.
How should I use these flashcards?
Read the syllabus first so you know the shape of the subject, then drill the deck. Examius schedules each card with spaced repetition, so cards you keep missing come back sooner and ones you know drift further apart.