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If a beneficiary of a life insurance policy predeceases the insured and no contingent beneficiary was named, the proceeds typically:
A
B
C
D
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2026 Statistics
Key Facts: HS 330 Exam
$15M
2026 Basic Exclusion Amount
IRS / One Big Beautiful Bill Act
$19,000
2026 Gift Annual Exclusion
IRS
$15M
2026 GST Exemption
IRS
40%
Top Transfer Tax Rate
IRC Section 2001
100
Free Practice Questions
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Proctored Final Exam
The American College
HS 330 Fundamentals of Estate Planning is an online proctored, multiple-choice course final exam from The American College of Financial Services within the ChFC and CFP Education Programs. It tests the estate and gift tax planning process, wills and probate, the unified transfer tax (2026 basic exclusion $15,000,000, annual gift exclusion $19,000, GST exemption $15,000,000, 40% top rate), gross estate inclusion, the unlimited marital and charitable deductions, trusts, powers of appointment, generation-skipping transfer tax, asset valuation, life insurance, and estate liquidity. The American College does not publish a fixed public question count, pass rate, or standalone exam fee.
Sample HS 330 Practice Questions
Try these sample questions to test your HS 330 exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.
1What is the basic exclusion amount (the amount sheltered by the unified credit) against federal estate and gift tax for a decedent dying or a donor making gifts in 2026?
A.$13,990,000
B.$11,700,000
C.$15,000,000
D.$5,490,000
Explanation: The One Big Beautiful Bill Act amended IRC Section 2010(c)(3) to set the basic exclusion amount at $15,000,000 for 2026, up from $13,990,000 in 2025. The unified credit equals the tentative tax on this amount.
2In 2026 a donor gives $34,000 outright to an unrelated friend. How much of this gift is a taxable gift after applying the gift tax annual exclusion?
A.$0
B.$19,000
C.$34,000
D.$15,000
Explanation: The 2026 annual exclusion is $19,000 per donee for gifts of a present interest. $34,000 minus the $19,000 exclusion leaves a $15,000 taxable gift, which reduces the donor's remaining applicable exclusion (or generates tax if exhausted).
3A gift in trust gives the beneficiary no current right to income or principal until age 30. For gift tax purposes, this transfer is characterized as a gift of:
A.A present interest qualifying for the annual exclusion
B.A future interest not qualifying for the annual exclusion
C.A terminable interest qualifying for the marital deduction
D.An incomplete gift with no tax consequences
Explanation: The annual exclusion is available only for gifts of a present interest, an unrestricted right to immediate use, possession, or enjoyment. A gift in trust deferring all benefit to age 30 is a future interest, so no annual exclusion is allowed unless a Crummey power is added.
4What is the highest marginal federal estate and gift tax rate applied to cumulative taxable transfers in 2026?
A.40%
B.35%
C.45%
D.55%
Explanation: The unified estate and gift tax has a top marginal rate of 40% under IRC Section 2001(c), reached on the taxable amount exceeding $1,000,000. The generation-skipping transfer tax also uses this 40% maximum rate.
5Property titled as joint tenancy with right of survivorship between two non-spouses passes at the first owner's death by:
A.The terms of the decedent's will
B.The state intestacy statute
C.Operation of law to the surviving joint tenant
D.Probate administration
Explanation: Joint tenancy with right of survivorship passes automatically by operation of law to the surviving joint tenant outside probate. The decedent's will cannot redirect the property, and intestacy does not apply because a survivorship feature governs.
6When a married decedent leaves the entire estate outright to a U.S.-citizen surviving spouse, the federal estate tax marital deduction is:
A.Limited to one-half of the adjusted gross estate
B.Limited to the basic exclusion amount
C.Available only if a QTIP election is made
D.Unlimited, deferring tax until the survivor's death
Explanation: IRC Section 2056 grants an unlimited marital deduction for qualifying transfers to a U.S.-citizen spouse, eliminating estate tax at the first death. The transferred property is instead included in the surviving spouse's estate, deferring rather than eliminating tax.
7A decedent owned a life insurance policy on his own life and named his estate as beneficiary. For federal estate tax purposes, the policy proceeds are:
A.Excluded entirely from the gross estate
B.Included only to the extent of the cash surrender value
C.Included in the gross estate under Section 2042
D.Included only if the policy was bought within three years of death
Explanation: Under IRC Section 2042, insurance proceeds are included in the gross estate if the proceeds are payable to the estate or if the decedent held incidents of ownership. Because the decedent owned the policy and the estate is beneficiary, the full death benefit is included.
8An irrevocable life insurance trust (ILIT) is funded so that the trustee owns and is beneficiary of a policy on the grantor's life. The principal estate tax advantage is that:
A.The premiums are income-tax deductible to the grantor
B.The proceeds qualify for the marital deduction
C.The death proceeds are excluded from the grantor's gross estate
D.The trust eliminates probate for all of the grantor's assets
Explanation: When properly structured, the ILIT (not the insured) owns the policy and holds no incidents of ownership for the grantor, so the proceeds escape inclusion under Section 2042. This removes the death benefit from the taxable estate while providing liquidity.
9Under the three-year rule of IRC Section 2035, which transfer is pulled back into the gross estate if the decedent dies within three years?
A.The transfer of a life insurance policy on the decedent's own life
B.A gift of marketable securities
C.An outright gift of cash to a child
D.A sale of property for full consideration
Explanation: Section 2035 brings back into the gross estate the proceeds of a life insurance policy on the decedent's life that was gifted within three years of death. Outright gifts of cash or securities are not subject to this rule after 1981.
10A bypass (credit shelter) trust is most commonly used to:
A.Use the first spouse's applicable exclusion amount and keep appreciation out of the survivor's estate
B.Qualify a terminable interest for the marital deduction
C.Avoid the generation-skipping transfer tax automatically
D.Provide an income tax deduction to the grantor
Explanation: A bypass trust funds with assets up to the first spouse's applicable exclusion amount, sheltering them with the unified credit. The trust assets and their post-death appreciation are excluded from the surviving spouse's gross estate even though the survivor may receive income.
About the HS 330 Practice Questions
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