Skip to Main Content
GiftLaw Pro
Charitable Giving & Tax Information Service
Back to Gift Planning Website
GiftLaw Pro Home   >  Chapter 6 - Charitable Deduction Methods  >  6.4 Lead Trusts  >  6.4.4 Testamentary Lead Trust  >  Basic Quiz

Basic Quiz - 6.4.4 Testamentary Lead Trust

1. Charitable lead trusts (CLTs) are most effective for donors of substantial wealth.
           
2. Using a series of lead trusts, the donor benefits from the powerful discounts from the lead trusts, but also is able to make distributions to heirs over a set number of years.
           
3. Testamentary lead trusts are best employed when children already have good money management skills.
           
4. A testamentary lead trust cannot be funded with a family limited partnership.
           
5. For a lead trust, the lowest applicable federal rate (AFR) produces the greatest deduction.
           
6. When a four-layer testamentary lead trust is created, the first, second and third layers are typically unitrusts, while the fourth layer is an annuity trust.
           
7. The typical payout chosen for a lead trust is quarterly payments.
           
8. The charitable deduction is equal to the remainder interest.
           
9. The generation-skipping transfer tax (GSTT) always applies to testamentary lead trusts.
           
10. If a testamentary lead trust is created to pay to grandchildren or a later generation, generation-skipping transfer tax (GSTT) will need to be paid.