Chapter 4 book test

Question 1

Probate can be described as;

a) The process of administering the deceased’s estate, collecting debts and paying any tax due
b) The situation where a person dies without having written a will or with an invalid will
c) A legal ruling delivered by a bankruptcy court
d) A legal document that gives a person the right to take control of another person’s financial affairs

Answer 1

a) The process of administering the deceased’s estate, collecting debts and paying any tax due before the assets are distributed

Question 2

The mental Capacity Act 2005 created which of the following?

a) the enduring power of attorney (EPA)
b) the lasting power of Attorney (LPA)
c) the beneficial power of attorney
d) the official power of attorney

Answer 2

b) the lasting power of Attorney (LPA)

Question 3

which types of trust is typically used when a proposed beneficiary is a child?

a) A discretionary trust
b) Charitable trust
c) an interest in possession trust
d) a bare trust

Answer 3

d) a bare trust

with bare trust the assets in the trust (the trust fund) belong to the beneficiary but are managed by the trustees of the fund. this makes them more suitable when the beneficiary is a child who is not able to manage the assets.

Question 4

which party manages the payment of capital and income from the assets of a discretionary trust

a) The executor
b) the trustees
c) the settlor
d) the beneficiaries

Answer 4

d) the beneficiaries

with discretionary trust, the trust property is held for the benefit of the beneficiaries and the trustees have discretion about how much to give to which beneficiaries and when