Certified Trust and Fiduciary Advisor (CTFA) 2025 – 400 Free Practice Questions to Pass the Exam

The correct response is that Susan's DSUE, or Deceased Spousal Unused Exclusion, after her second husband's death will be determined by Scott's estate tax exemption at his death.

When a spouse passes away, the unused portion of their estate tax exemption can be transferred to the surviving spouse, enabling them to increase their own exemption amount when they pass away. This transfer means that after the death of the second spouse, the surviving spouse can utilize the combined unused exemption amounts from both deceased spouses.

In this case, since Susan's first husband, David, created a DSUE that could have been utilized, the critical factor for Susan’s overall exemption when her second husband, Scott, passes away, is Scott's estate tax exemption at that time. This limitation centers around the most recent spouse's tax situation, which directly affects the estate planning and tax implications for the survivor.

The other options, while potentially relevant in different contexts, do not address the specific mechanics of how DSUE is calculated and applied in the situation of multiple marriages. The annual exemption limit, for instance, is subject to change but does not apply to the actual calculation of DSUE in this scenario. Thus, focusing on Scott’s exemption provides the most accurate reflection of how Susan