Estate Chapter 1

Question 1

In a community property state, how is property owned in the name of spouse treated A if A dies before the B?

Answer 1

Unless the property was purchased by spouse A with money earned prior to marriage or with gift/inheritance funds, the property is community property and Spouse B owns half.

Question 1

What type of property carries exposure to ancillary probate?

Answer 1

Real property that is located in the non-domicile state

Question 2

Can term life insurance have value and be considered community property in a community property state?

Answer 2

Yes; as long as the insured did not die for potential death benefits

Question 3

If something passes by beneficiary, it is not subject to probate.

Answer 3

Yes; e.g., contracts with beneficiaries

Question 4

Can property that doesn’t appreciate get a step up in basis?

Answer 4

No

Question 5

Not everything included in the gross estate will pass through probate.

Answer 5

True

Question 6

Why is life insurance deemed to be community property?

Answer 6

The premium payment comes from community property. Therefore, 1/2 of each policy is owned by the spouse (unless premium is paid for by inheritance)

Question 7

What is quasi community property?

Answer 7

Property that would have been CP except for the fact that it was acquired while the couple was living in another state

Question 8

Does JTWROS pass outside the terms of a will?

Answer 8

Yes

Question 9

What are some characteristics of JTWROS?

Answer 9

Full control and ownership for the survivor

Partial basis step-up at the first death

Not subject to probate

Passage of property by operation of law

Question 10

Benefits for TBE

Answer 10

privacy, simplicity, creditor protection from each spouse’s creditors, avoidance of probate delays and costs

Question 11

What can terminate or transfer the property in a TBE acct?

Answer 11

mutual agreement by both spouses

death of either spouse

upon divorce settlement

Question 12

At what point is an estate settles?

Answer 12

after all distributions are made, and a final accounting is presented, the executor is discharged by the court, and the estate is closed.

Question 13

Couple in community property state; community property examples

Answer 13

Earnings during the marriage

ER-provided life insurance

ER-provided profit-sharing plan account

Business established in Spouse A’s name after they got married

Question 14

How is property bought by funds from inheritance or gifts treated in a community property state?

Answer 14

As separate property

Question 15

Appreciated community property receives a full step-up in basis at the death of the first spouse.

Answer 15

APPRECIATED!!! Homes, securities, etc.

Question 16

If separate property is commingled with community assets, what does it become?

Answer 16

Community property