Estates Ch 2 Basic Estate Planning Flashcards
Duane drafted his own will utilizing the “Will-Maker” software that he purchased online and sends it to you for a review. In your first review of the will, you look for which of the following most common provisions?
a. A left-over clause.
b. A statement of the domicile of the testator.
c. A primary clause.
d. A codicil.
The correct answer is b.
A well-drafted will contains the statement of the domicile of the testator. Both a left-over clause and aprimary clause are made up terms. A codicil is an amendment or supplement to the will, not a provision of a will.
When additional property is acquired after writing a will, a codicil can amend the will without having to rewrite the entire will to include provisions that dispose of the new property.
a. True b. False
True
Which of the following documents appoints a surrogate decision-maker for health care?
a. Durable power of attorney for health care.
b. General power of appointment.
c. Life insurance beneficiary designation.
d. All of the above
The correct answer is a.
A durable power of attorney for health care appoints a surrogate decision-maker for health care
decisions. A general power of appointment gives the power holder the ability to appoint the principal’s
assets to anyone, including the power holder, and for whatever reason. It does not give any powers
related to health care decisions. A life insurance beneficiary designation only designates the beneficiary
of life insurance proceeds.
While he was in the hospital, Emile told his wife that if he died he wanted to give his fishing tackle to his daughter, Rayna; his golf equipment to his son, Joshua; his truck to his daughter, Dina; and everything else to her (his wife). Emile died the next day without writing anything that he told his wife, but a nurse and another patient were in the room and heard his declarations. What type of will does Emile have, if any?
a. Holographic.
b. Nuncupative.
c. Statutory.
d. Emile does not have a will.
The correct answer is b.
Emile has an oral/nuncupative will - oral dying declarations made before sufficient witnesses.
An oral/ nuncupative will may or may not be valid in Emile’s state of domicile.
Of the following, which is not a clause commonly found in a will?
a. Introductory clause.
b. Payment of debts clause.
c. Payment of taxes clause.
d. Conclusory clause.
The correct answer is d.
A conclusory clause does not exist so it is not a clause commonly found in a will. An introductory clause
identifies the testator. A payment of debts clause directs which legatees/assets will bear the debts of the
estate. A payment of taxes clause directs which legatees/assets will bear the taxes of the estate.
Melissa is terminally ill. Her doctors gave her twenty-four months to live thirty-six months ago. Melissa has decided that she does not want to be placed on life support. Which document will direct Melissa’s doctors to refrain from putting her on life support?
a. Living will.
b. Power of attorney.
c. Durable power of attorney.
d. General power of appointment.
The correct answer is a.
Only a living will would give the doctors the ability to refrain from placing her on life support. A living
will, also known as an advance medical directive, is an individual’s written last wishes regarding
sustaining life. It establishes the medical situations and circumstances in which the individual no longer
wants life-sustaining treatment. Neither a power of attorney nor a durable power of attorney would give
the ability to end life-sustaining treatment.
Which of the following clauses in a will would detail the required amount of time a beneficiary must live following the death of the decedent to receive a bequest?
Survivorship clause.
Living clause.
Remaining life clause.
Simultaneous death clause.
Survivorship clause.
Rationale
A survivorship clause provides that the beneficiary must survive the decedent for a specified period in order to receive the inheritance or bequest. Neither a living clause nor a remaining life clause exists. A simultaneous death clause provides an assumption of which person died first in the event that two people die simultaneously
Antonio agreed to sell his house to his brother, but could not attend the closing date of the sale (act of sale).
Of the following options, which would allow Antonio’s mother to attend the closing and sign the necessary documents on Antonio’s behalf?
Living will.
Advanced real estate directive.
Power of attorney.
Side instruction letter.
Power of attorney.
Rationale
Antonio could give his mother a power of attorney to sign the documents at the closing date of the sale. None of the other options would be appropriate in this case. An advanced real estate directive does not exist.
Which of the following is least likely to be included in a letter of instruction for incapacity?
Name, address, and phone number of insurance agent.
Funeral instructions.
Location of marriage certificate and military discharge (DD 214).
List of assets and liabilities.
Funeral instructions.
Rationale
A letter of instruction for incapacity will provide instructions for the attorney-in-fact, providing important information needed while the principal is alive but incapacitated. Option a is necessary for the attorney-in-fact to determine whether an insurance policy may cover a period of disability or cover additional costs associated with the incapacity. Option c is necessary in situations where the attorney-in-fact must file for Social Security or Veteran’s benefits. Option d is needed to guide the attorney-in-fact regarding obligations to be paid and resources available. Option b is not needed because all powers of attorney cease at death; therefore, the attorney-in-fact is not responsible for funeral arrangements. A side letter of instruction for death is used to provide the executor of the estate with instructions regarding the funeral, location of the will, and other important information needed to settle the estate.
Alice recently passed away. She had three children, Diego, Cate, and Brennan. Diego has two children, Cate has four children, and Brennan has one child. Diego died before Alice. What is the distribution for Alice’s estate based on the per stirpes method?
Diego’s two children, Cate and Brennan each receive 1/4 of the estate.
Diego’s two children receive 1/6 each and Cate and Brennan receive 1/3 each.
Cate and Brennan each receive 1/3 and all of the grandchildren split the remaining 1/3.
Cate and Brennan split the estate 1/2 each.
Diego’s two children receive 1/6 each and Cate and Brennan receive 1/3 each.
Rationale
Under per stirpes, Cate and Brennan each receive 1/3 of the estate, and Diego’s two children split Diego’s 1/3 or 1/6 each. In other words, Diego’s two children receive the share that Diego would have enjoyed had he lived.
Alice recently passed away. She had three children, Diego, Cate, and Brennan. Diego has two children, Cate has 4 children, and Brennan has one child. Diego died before Alice. What is the distribution for Alice’s estate based on the per capita method?
Diego’s two children, Cate and Brennan each receive 1/4 of the estate.
Diego’s two children receive 1/6 each and Cate and Brennan receive 1/3 each.
Cate and Brennan each receive 1/3 and all of the grandchildren split the remaining 1/3.
Cate and Brennan split the estate 1/2 each
Diego’s two children, Cate and Brennan each receive 1/4 of the estate.
Rationale
Under per capita, Cate, Brennan and Diego’s two children each receive 1/4 because the per capita method is “by the head” and counts the heads of all beneficiaries.
Carl is married and owns and manages several rental properties. He is concerned that if he became incapacitated, the properties would not be properly managed and his tenants would be upset.
Of the following arrangements, which one could fulfill Carl’s desire to plan for the management of his rental properties in the case of his unanticipated physical or mental incapacity?
A durable power of attorney.
A will.
A living will.
A side instruction letter.
A durable power of attorney.
Rationale
A durable power of attorney would give the power-holder the ability to manage the property if Carl become incapacitated. Note, if the property is owned joint tenancy or tenancy by the entirety, the joint tenant could manage the property in the event of Carl’s incapacity. A will does not solve the problem as it directs property to be distributed after one’s death.
A living will deals with life sustaining treatments, such as feeding tubes.
A side instruction letter goes along with the will and is only applicable after death.
While Carl could have a letter of instruction for incapacity, it is designed to guide the agent under the power of attorney; therefore, if Carl does not have a durable power of attorney, the letter of instruction may not accomplish his goal
Kobe spent four hours with his attorney drafting his will and ensuring that the will accounted for everything. The will was signed, witnessed, and notarized before it was filed away in the attorney’s safety deposit box. Two years later, Kobe reviews the will and determines that he had forgotten to account for grandchildren not yet born at the time the will was written.
Which of the following would be the least expensive way for Kobe to add in this new language?
Write a codicil.
Add a generation-skipping transfer clause to his current will.
Revoke the prior will and write a new will.
Issue a disclaimer indicating his intentions.
Confidence of your answer
Write a codicil
Rationale
Kobe has the option of writing a codicil to amend the will. This would be the least expensive and probably easiest way to amend the will. Kobe could also revoke the prior will and write a new will, but writing a codicil would certainly be less expensive. Neither a generation-skipping transfer clause nor a disclaimer amends a will.
After listening to a popular radio financial planning talk show, Kesha decided to grant a durable power of attorney to her neighbor, Tarik. All of the following statements regarding the durable power of attorney are correct except?
At the creation of the durable power of attorney, Kesha must be at least 18 years old and competent.
The power can spring at a certain age or event.
After Kesha’s death, the power remains in force.
If Kesha becomes disabled, the power remains in force.
After Kesha’s death, the power remains in force.
Rationale
A durable power of attorney does not remain in force after the death of the principal, but a durable power of attorney does remain in force after the disability or incapacity of the principal. All of the other statements are true.
Glen’s will leaves all of his property to his spouse. If his spouse does not survive him by more than eight months, the property will transfer to Glen’s only son. Glen dies on April 13 and his spouse dies the following January 12. Of the following statements, which is true?
Glen’s property will transfer to his son.
Glen’s property will not transfer to his spouse.
Glen’s property will transfer to his spouse, but the property will not be eligible for the unlimited marital deduction in Glen’s estate.
Glen’s property will transfer to his spouse and the property will be eligible for the unlimited marital deduction in Glen’s estate.
Confidence of your answer
Glen’s property will transfer to his spouse, but the property will not be eligible for the unlimited marital deduction in Glen’s estate.
Rationale
Glen’s will contains a survivorship clause requiring his spouse to survive him by more than eight months to receive his property.
Glen’s spouse dies nine months after Glen and does receive his property. However, if a will contains a survivorship clause, the clause cannot be written to require the spouse to outlive the decedent by more than six months to qualify for the unlimited marital deduction.
In this case, the survivorship clause requires eight months, so Glen’s spouse will receive the property, but the property will not qualify for the unlimited marital deduction.
