Chapter 31 - Estate Planning Flashcards
When a married person dies intestate, the surviving spouse is entitled to:
Answer
1.
the same portion as each of the couple’s children
2.
the entire estate
3.
a forced share of the estate, which is calculated differently in different states
4.
nothing
3
Through which of the following procedures can a person inherit? Answer 1. Will 2. Trust 3. Intestacy 4. All of the above.
4
In order to travel extensively and not worry about handling her affairs, Lee transfers most of her assets into a trust, with her bank serving as trustee. She has created: Answer 1. a travel trust. 2. a constructive trust. 3. a testamentary trust. 4. an inter vivos trust.
4
A major advantage of an Asset Protection Trust is:
Answer
1.
Its value cannot decline due to stock market fluctuations.
2.
Its proceeds are tax-free.
3.
It is shielded from creditors that arise after the trust is established
4.
It has a guaranteed rate of return.
3
A trust that goes into effect during the grantor’s lifetime is called: Answer 1. an irrevocable trust 2. a testamentary trust 3. an anos durente trust 4. an inter vivos trust
4
In legal terms, the word “issue” means: Answer 1. all descendents of the testator 2. the process of inheritance 3. the children of the testator 4. the process of making a will valid
1
Myron had two children, Cheryl and Pete, who predeceased him. Cheryl had three children and Pete had one child. Myron died testate. Which of the following is true?
Answer
1.
If Myron’s will indicates that the issue are to inherit per stirpes, Pete’s child will receive one fourth of Myron’s estate.
2.
If Myron’s will indicates that the issue are to inherit per capita, Pete’s child will receive one half of Myron’s estate.
3.
If Myron’s will indicates the issue are to inherit per capita, each of Cheryl’s children will receive one sixth of Myron’s estate.
4.
If Myron’s will indicates that the issue are to inherit per stirpes, Pete’s child will receive one half of Myron’s estate.
4
Joel is displeased with his son’s lifestyle choices and, instead of dividing his estate, Joel wants to leave all of his property to his daughter, Marie, when he dies. Joel:
Answer
1.
may disinherit his son, but he must indicate in the will his reason for doing so.
2.
may disinherit his son for any reason as long as Joel indicates in the will that the son was omitted on purpose.
3.
may disinherit his son only if Joel leaves the son a nominal amount, such as $1.
4.
may not leave everything to his daughter and nothing to his son. If Joel tries to do this, his son can take a forced share of his father’s estate.
2
Which of the following is not required to create a valid trust: Answer 1. property transferred to the trust. 2. mental capacity of the grantor. 3. a beneficiary(ies). 4. witnesses.
4
Legal requirements for a will depend on state law, but generally include all but which of the following? Answer 1. Signatures of at least three witnesses. 2. Witnesses who will not inherit under the will. 3. A writing. 4. The testator’s signature.
1
A trust created in a will is: Answer 1. a testamentary trust. 2. an inter vivos trust. 3. a constructive trust. 4. a probate trust.
1
Which of the following is true about wills?
Answer
1.
Once a will is written, it cannot be changed.
2.
The testatrix cannot disinherit her minor children without stating a reason in the will.
3.
If the will meets the legal technicalities, the surviving spouse cannot override it.
4.
A will can be amended to change specific terms by execution of a codicil.
4
Which statement is not true of trusts?
Answer
1.
Trust documents are filed with the county court and are public documents.
2.
Legal and beneficial ownership reside in the same entity
3.
A grantor can create a trust after her own death.
4.
There are four parties involved: the grantor, the settlor, the donor and the beneficiary
2
Dr. Gavornne advises his very ill patients to prepare a living will. The purpose of a living will is: Answer 1. to transfer life insurance. 2. to express a desire not to have extreme medical treatment that would prolong their lives. 3. to make a disposition of property. 4. to consent to organ donation.
2
Joel is displeased with his son’s lifestyle choices and, instead of dividing his estate, Joel wants to leave all of his property to his daughter, Marie, when he dies. Joel:
Answer
Selected Answer: 3.
may disinherit his son, but he must indicate in the will his reason for doing so.
Correct Answer: 1.
may disinherit his son for any reason as long as Joel indicates in the will that the son was omitted on purpose.
1
A power of attorney may expire under all the following conditions EXCEPT: Answer 1. the attorney in fact losing the license to practice law 2. being revoked by the principal 3. the death of the principal 4. the incapacity of the principal
1
Which of the following does not act as a revocation of a will?
Answer
1.
The testator’s putting an X through it.
2.
Physically destroying the will by intentionally shredding it.
3.
Signing a new will that expressly revokes prior wills.
4.
Destruction of the will by a house fire.
4
Lying on her hospital bed alone one night, Phyllis grabs a pen and paper. With the last of her strength, she wrote her last will and testament leaving all her worldly possessions to her next-door neighbor, Aaron. This type of will is: Answer 1. a nuncupative will. 2. disinherited children's share will. 3. holographic will. 4. None of the above.
3
What is (the book’s) definition of Estate Planning?
The process of giving away property after (or in anticipation of) death.
What is an Estate?
The legal entity that holds title to assets after the owner dies and before the property is distributed.
Who is a Decedent?
The person who has died.
Who is a Testator/Testatrix?
Someone who has signed a valid will.
What is Intestate?
To die without a will.
What is an Heir?
Someone who inherits from a decedent who died intestate.
What is a Devisee?
Someone who inherits under a will.
What is Probate?
The process of carrying out the terms of a will.
Who is an Executor/Executrix?
A personal representative chosen by the decedent to carry out the terms of the will.
Who is an Administrator/Administratrix?
A personal representative appointed by the probate court to oversee the probate process for someone who has died intestate
Who is a Grantor/Settlor?
Someone who creates a trust.
Who is a Donor?
Someone who makes a gift or creates a trust.
What are the two primary goals of estate planning?
- To ensure that property is distributed as the owner desires and
- To minimize estate taxes.
Who levy’s estate taxes? Who has probate courts?
The federal government and many states levy estate taxes.
Only the states have probate courts.
What is used to make probate law more consistent among states?
The National Conference of Commissioners on Uniform State Laws issued a
Uniform Probate Code (UPC). (fewer than half the states have adopted it)
What is a Will?
A legal document that disposes of the testator’s property after death. It can be revoked or altered at any time until death.
What are four reasons a person should have a will?
- Ensure that their assets are distributed in accordance to their wishes
- Select a personal representative to oversee their estate so one is not appointed.
- Avoid unnecessary expenses. Wills can reduce the estate tax bill.
- Provide guardians for minor children. If parents do not appoint a guardian before they die, a court will.
Who can a person leave their assets to?
Anyone they want.
