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GiftLaw Pro Home   >  Chapter 3 - Deferred Gifts  >  3.5 Lead Trust  >  3.5.1 Family, or Non-Grantor, Lead Trusts  >  Basic Quiz

Basic Quiz - 3.5.1 Family, or Non-Grantor, Lead Trusts

1. A lead trust must pay out at least 5% and no more than 50%.
           
2. The longest term allowable for a lead trust is 20 years.
           
3. It is permissible to have a lead trust for the lesser of a life or a term of years.
           
4. A lead trust with the remainder passing solely to the family of the donor always produces an income tax deduction.
           
5. A lead trust is a tax-exempt trust.
           
6. Lead trusts are an excellent way to transfer property to family at a reduced transfer tax cost.
           
7. The lead trust measuring life is limited to that of the donor, a spouse or a lineal ancestor or spouse of a lineal ancestor of the remainder beneficiaries.
           
8. The 10% minimum deduction interest test does not apply to lead trusts.
           
9. The lower the Applicable Federal Rate, the higher the deduction with a charitable lead trust.
           
10. With a living lead trust, there is no step up in basis of the trust assets.