Estate Planning Basics

Question 1

Estate Planning Definition

Answer 1

Process of Accumulation, Management, Conservation, & Transfer of wealth considering Legal, Tax, and Personal objectives

Question 2

Effective Transfers Definition

Answer 2

Decedent’s assets are transferred based on his Wishes

Question 3

Efficient Transfers Definition

Answer 3

Transfer costs including Taxes are Minimized

Maximize net to Heirs

Question 4

Intestacy Laws Meaning

Answer 4

Means dying without a Will

Question 5

Legatee

Answer 5

Person receiving from decedent’e estate under the Will

Question 6

Heir Meaning

Answer 6

Person who inherits under the Intestacy Laws of the state (dying without a will)

Question 8

Abatement Definition

Answer 8

Reduction of a bequest

(Will leaves a $100k portfolio to cousin, at time of death it’s only worth $20k, this is a reduction of a bequest)

Question 9

Ademption

Answer 9

Extinguishment of a Right

(Asset written in the will was sold or disposed of by time of death, so you don’t get it, also don’t get a substitute asset)

Question 9

Durable POA for Health Care

Answer 9

In Writing

Survives Disability but NOT Death

Question 9

Advance Medical Directive

Answer 9

Power to terminate life sustaining treatment

Question 10

Holographic Will

Answer 10

Written in testator’s handwriting

must be signed and dated by testator

Question 11

Non-cupative Will

Answer 11

Oral

Dying declarations made before sufficient witness

Not valid in all states

Usually only covers tangible property)

Question 12

Statutory Will

Answer 12

Drawn by an attorney, complying with laws of domiciliary state

Question 13

Survivorship Clause of a Will

Answer 13

Requires the Bene to survive the decedent for specified period of time in order to inherit

Can NOT be longer than 6 months for transfer to qualify for unlimited marital deduction

Question 14

Disclaimer Clause

Answer 14

Reminds Legatee they can disclaim inheritance

Clause may direct who inherits if they do disclaim

Question 15

Rules to Disclaim

Answer 15

Disclaimer can NOT have benefited from it before disclaiming

(so Disclaim it before the title transfer)

Must be in writing within 9 months

Person disclaiming can NOT direct disposition of property

Question 16

Reasons to Disclaim?

Answer 16

Surviving spouse may disclaim so more assets go to kids and the applicable estate tax credit is utilized

Kids may disclaim so surviving spouse can inherit to utilize marital deduction

Question 17

Power of Attorney

Answer 17

Can include the power to appoint assets

Ends at death of principal

May be revoked anytime by principal

Question 18

Power of Appointment

Answer 18

A power included in a Trust or POA

Power to transfer assets

Allows holder to direct assets to another (pay bills)

May survive death of grantor (If the power was inside a trust and the trust lives on)

May be revoked anytime by principal

Question 19

POAs: Who do you, the Planner, work for when the Principal dies?

Answer 19

Accounts will be frozen when principal dies until,

Estate Administrator brings the Letters of Testamentary to gain control of accounts

Question 20

Can the Planner refuse to take action that the POA requests?

Answer 20

If the POA agent requests an action that’s harmful to the principal, the planner can refuse to take action

Contacting Compliance Dept. is also a good answer choice

Question 21

General Power of Appointment: When is it used, marital or non-marital trust?

Answer 21

Used for Marital Trusts so they can utilize unlimited marital deduction

Question 22

Does the Holder of a General Power of Appointment have inclusion of the assets in their gross estate at death?

Answer 22

If you hold the power at death, you will have inclusion of value of the assets in your gross estate

Question 23

What types of Powers will NOT cause inclusion in Holder’s gross estate?

Answer 23

Power of Attorney

Limited Power of Appointment

Question 24

What type of Power would be used in a Non-marital Trust?

Answer 24

Limited Power of Appointment