Estate Planning Documents - Review Questions

Question 1

Given the manner in which the client’s assets are owned, a will may never transfer any property. So, why is a will still the most important estate planning document?

Answer 1

(1st) it is only within the provisions of the will that the decedent can appoint the executor of the estate.
(2nd) if the decedent has minor children, it is only within the provisions of the will that the guardians for the minor children may be appointed.

Question 2

What are the most common types of wills? (Select all that are true.)

1) simple wills
2) holographic wills
3) pour-over wills
4) joint wills
5) nuncupative wills

Answer 2

1) simple wills
2) holographic wills
3) pour-over wills
4) joint wills
5) nuncupative wills

All the choices are common types of wills.

Question 3

To qualify for Social Security disability benefits on the wage earner’s record:
An unmarried child must be…?

Answer 3

under 18
under 19 and a full-time high school student or
18 or older with a disability that started before age 22

Question 4

To qualify for Social Security disability benefits on the wage earner’s record:
A spouse must be…?

Answer 4

age 62 or older
caring for a child who is disabled or under 16
50 or older and disabled before the wage earner’s death or within seven years after death

Question 5

To qualify for Social Security disability benefits on the wage earner’s record:
An ex-spouse must be…?

Answer 5

50 or older
disabled and
married to the wage earner for 10 years or longer

Question 6

Which statement is correct?

1) A mutual will can also be a reciprocal will
2) A pour-over will transfers property into a testamentary trust
3) Property will avoid intestacy if the owner has a valid will at death
4) An elective share statute allows the heirs to take a percentage of the decedent’s estate in lieu of property left
to them in the will.
5) A will can change the beneficiary of a trust

Answer 6

1) A mutual will can also be a reciprocal will

A mutual will can also be a reciprocal will.

A mutual will is an agreement to bequeath property to another person, and with a reciprocal will, both spouses agree to leave their entire property interests to each other. So in this case, a mutual will can also be a reciprocal will.

Why the other answers are incorrect:

A pour-over will transfers property to a trust that must exist prior to the decedent’s death. A testamentary trust is created by a will, which goes into effect after the testator dies.

Partial intestacy can occur if the will lacks a residuary clause, or if property is bequeathed to an ex-spouse, in some states.

An elective share statute only applies to a surviving spouse- not to all heirs.

Only a revocable trust document can change the terms of a trust or change the trust beneficiaries- not a will. People can write anything they want in their will, but that doesn’t mean their property will be distributed that way. For example, if you hold property as JTWROS with your spouse, but your will appoints the property to your son, then your son won’t receive the property even though it was bequeathed to him in the will. So the way in which property is owned and titled may dictate how property is ultimately transferred to others.

Question 7

What type of power of attorney can represent the principal before and after the principal becomes incapacitated?

1) Springing durable power of attorney
2) Durable power of attorney
3) Health care power of attorney
4) Non-durable power of attorney

Answer 7

2) Durable power of attorney

Durable power of attorney

Why the other answers are incorrect:

A springing POA becomes activated when doctors certify that the principal is mentally incompetent.

A health care power of attorney is used when the principal is unable to make medical decisions for himself- not before

A non-durable POA goes into effect immediately but ceases when the principal becomes incapacitated.

Question 8

Which statement is NOT correct

1) A Standby revocable trust must be created before the grantor becomes incompetent.
2) A plenary guardian is limited to only managing a ward’s property and financial affairs.
3) Limited guardianships can be awarded to manage only specific aspects of an incompetent person’s care,
giving that individual some control over his circumstances.
4) If a trustee of a Special Needs trust pays for something that is already covered by a government program,
then benefits may be reduced by this amount.

Answer 8

2) A plenary guardian is limited to only managing a ward’s property and financial affairs.

A plenary guardian is only limited to managing a ward’s property and financial affairs – is not correct.

A plenary guardian can also manage a ward’s personal care in addition to the ward’s property and financial affairs.

Why the other answers are correct:

A Standby revocable trust must be created before a grantor becomes incompetent, because only a grantor can create a trust—not the grantor’s agent.

Guardians can be awarded full or limited guardianships.

Special Needs trusts are created to pay for additional services that government benefits do not provide.

Question 9

At what dollar value will an individual with disabilities lose their eligibility to receive SSI benefits if the ABLE 529 exceeds:

1) $50,000
2) $150,000
3) $100,000
4) $12,060,000

Answer 9

3) $100,000

Question 10

How much in countable assets can you have and still qualify for Medicaid?

1) $5000
2) $2000
3) $2500
4) $14000

Answer 10

2) $2000

Question 11

How long is the look-back period for Medicaid?

1) 60 months
2) 5 months
3) 6 years
4) 30 months

Answer 11

1) 60 months

Question 12

Which of the following is not an Activity of Daily Living?

1) Eating
2) Toileting
3) Exercising
4) Bathing

Answer 12

3) Exercising

Question 13

What are two considerations that an offer from a viatical settlement firm primarily depends on?

1) Cash value of policy and insured’s life expectancy
2) Face value of policy and insured’s life expectancy
3) Cash value of policy and illness that the insured has
4) Face value of policy and cash value of policy

Answer 13

2) Face value of policy and insured’s life expectancy

Question 14

Mr. Smith would like to name his son as his Power of Attorney. He would like his son to not have any authority to act on his behalf until the time when Mr. Smith becomes incapacitated. Which type of POA should Mr. Smith have?

1) Non-Durable Power of Attorney
2) Durable Power of Attorney
3) Springing Power of Attorney

Answer 14

3) Springing Power of Attorney

Question 15

Which of the following is not typically the basis for a will contest?

1) The testator of the will is not of sound mind
2) The testator was deceived by fraud
3) The testator specifically omitted a child
4) The testator suffered from an insane delusion

Answer 15

3) The testator specifically omitted a child

Question 16

CFP Board Released Question 1996

Which one of the following goals can be accomplished using a “pour over” provision in a will?

1) transfer of assets from an estate into a trust created prior to the “pour over” provision
2) minimization of estate taxes resulting from assets owned prior to the existence of the “pour over” provision
3) transfer of assets from an estate to the estate of another person who died within the past three years
4) reduction of probate expenses during administration

Answer 16

1) transfer of assets from an estate into a trust created prior to the “pour over” provision

Question 17

CFP Board Released Question 1996

Doris Jenkins is a 71 year-old widow with a son and daughter ages 43 and 45 and six grandchildren. Doris has an estate currently worth $572,000 which includes her home worth $250,000 and a life insurance policy on her life with a face value of $160,000. Her children are named as primary beneficiaries. Doris recently suffered a severe stroke that left her paralyzed on her right side. She is home from the hospital but her health will continue to decline and she will need to go into a nursing home within one year. The only estate planning she has done to date is to write a will in 1989 which left all her assets to her children equally. Of the following estate planning considerations, which is/are appropriate for Doris at this time?

(1) Transfer ownership of her home to her children so it will not be counted as a resource should she have to go into a nursing home and apply for Medicaid.
(2) Execute a durable general power of attorney and a durable power of attorney for health care.
(3) Place all of her assets in an irrevocable family trust with her children as beneficiaries.
(4) Start a gifting program transferring assets up to the annual exclusion amount to each of her children and grandchildren.

(1), (2), (3) and (4) only
(2) and (3) only
(1) and (4) only
(4) only
(2) only

Answer 17

(2) only