Estate Planning Flashcards
What is a will?
A legal document that outlines how a person’s assets should be distributed after death.
What is a living will?
A document specifying medical treatment preferences if incapacitated.
What is a durable power of attorney?
Allows someone to manage your financial affairs if you’re incapacitated.
What is a healthcare proxy?
Designates someone to make medical decisions if you’re unable.
What is a letter of intent?
A non-binding document that outlines personal wishes and instructions.
What does ‘intestate’ mean?
Dying without a will—state law determines asset distribution.
What is a revocable living trust?
A trust that can be changed during life, used to avoid probate.
What is an irrevocable trust?
A trust that cannot be changed—used for tax and asset protection.
What is a testamentary trust?
A trust created through a will that takes effect upon death.
What is a special needs trust?
Provides for a disabled beneficiary without impacting government benefits.
What is a charitable remainder trust (CRT)?
Pays income to beneficiaries, remainder goes to charity.
What is a grantor trust?
A trust where the creator retains control and pays taxes on income.
What is a beneficiary designation?
A named person who receives account assets directly, bypassing probate.
Why are beneficiary designations important?
They override the will—assets go to the named person.
What is TOD (Transfer on Death)?
Transfers assets directly to a named person without probate.
What is JTWROS?
Joint ownership where assets pass directly to the surviving owner.
What is community property?
In certain states, assets acquired during marriage are owned equally.
What is probate?
The legal process of validating a will and distributing assets.
What assets go through probate?
Assets owned solely in the decedent’s name without a beneficiary or trust.
What assets avoid probate?
Assets with beneficiaries, in trust, or held in joint ownership.
What is ancillary probate?
Probate in another state for out-of-state property.
What is the federal estate tax exemption in 2025?
$13.61 million per individual.
Are inherited IRAs subject to RMDs?
Yes, most non-spouse beneficiaries must deplete within 10 years.
What is a step-up in basis?
Resetting asset value to fair market value at date of death.
