Estates Ch 4 Probate Process

Question 1

The probate process protects the decedent’s creditors by ensuring that the debts of the estate are paid prior to distributions to heirs.

a. True b. False

Answer 1

True

Question 2

The probate process often requires the executor or administrator to advertise the upcoming probate for a statutory period of time in legal newspapers to give interested parties notice to enter into the process.

a. True b. False

Answer 2

True

Question 3

If a partner of a nontraditional, unmarried couple wishes to pass assets to the surviving partner, he or she should plan to avoid probate.

a. True b. False

Answer 3

True

Question 4

Court-appointed administrators must generally post a bond.

a. True b. False

Answer 4

True

Question 5

Letters testamentary provide the holder with the legal authority to perform the functions of executor.
a. True b. False

Answer 5

True

Question 6

Letters testamentary provide the holder with the legal authority to perform the functions of executor.

a. True b. False

Answer 6

True

Question 7

A decedent’s interest in property owned “joint tenancy with right of survivorship” with his surviving brother will not pass through probate.

a. True b. False

Answer 7

true

Question 8

Testate

Answer 8

having made and left a valid will

Question 9

If Kenzie died with each of the following property interests, which will be excluded from her probate estate?

a. Property owned as community property.
b. Property held tenancy in common.
c. Death proceeds of life insurance payable to a living stranger.
d. Property owned solely

Answer 9

the correct answer is c.

All options except c are included in a decedent’s probate estate. Life insurance and other death proceeds are included in the decedent’s gross estate for estate tax purposes, but are not included in the decedent’s probate estate

Question 10

Which of the following property interests of a decedent will avoid probate?

a. Proceeds of life insurance payable to the decedent’s estate.
b. Community property.
c. Property owned tenants in common with the decedent’s father.
d. Proceeds of life insurance payable to the decedent’s living son.

Answer 10

The correct answer is d.

Proceeds of a life insurance policy payable to the decedent’s living son will avoid probate. Options a, b,
and c will be included in the probate estate.

Question 11

All of the following statements are correct except:

A person named in a will to receive property is referred to as a legatee.

A person who dies with a valid will is said to die intestate.

The term devisee is used to refer to a person who inherits real property under the will.

A person who receives property under the state intestacy laws is called an heir.

Answer 11

A person who dies with a valid will is said to die intestate.
Rationale

The other statements are correct. Option b is incorrect as it describes testate.

Question 12

Which of the following is considered an advantage of the probate process?

The probate process creates delays.

The probate process is costly.

Heirs receive property with clear title.

Information that is filed with the court becomes public information.

Answer 12

Heirs receive property with clear title.

Rationale

A definite advantage to the probate process is that the heirs are able to secure clear title to assets. Options a, b, and d are all disadvantages to the probate process

Question 13

Which of the following statements is correct?

A person who dies with a valid will is said to die intestate.

A person who dies without a valid will is said to die testate.

A person named in a will to receive property is referred to as a devisee.

A person who receives property under the state intestacy laws is called an heir.

Answer 13

A person who receives property under the state intestacy laws is called an heir.
Rationale

Options a and b are mixed up. Option c is false as it describes a legatee.

Question 14

Many financial advisors believe that the best estate plan excludes as many assets as possible from the probate estate.
Which of the following statements justifies this belief?

The probate assets are not subject to creditors.

The probate estate is filed with the court and can become public knowledge.

The more excluded assets from the probate estate, the more expensive the administration is likely to be.

The more assets that go through the probate process, the faster the heirs are likely to receive the assets.

Answer 14

The probate estate is filed with the court and can become public knowledge.
Rationale

The probate estate becomes public knowledge, thus eliminating the privacy of the deceased.

Question 15

If Kenzie died with each of the following property interests, which will be excluded from her probate estate?

Property owned as community property.

Property held tenancy in common.

Death proceeds of life insurance payable to a living stranger.

Property owned solely.

Answer 15

Death proceeds of life insurance payable to a living stranger.
Rationale

All options except c are included in a decedent’s probate estate. Life insurance and other death proceeds are included in the decedent’s gross estate for estate tax purposes, but are not included in the decedent’s probate estate.

Question 16

Which of the following property interests of a decedent will avoid probate?

Proceeds of life insurance payable to the decedent’s estate.

Community property.

Property owned tenants in common with decedent’s father.

Proceeds of life insurance payable to the decedent’s living son.

Answer 16

Proceeds of life insurance payable to the decedent’s living son.
Rationale

Proceeds of a life insurance policy payable to the decedent’s living son will avoid probate. Options a, b, and c will be included in the probate estate.

Question 17

Which of the following is generally included in a decedent’s probate estate?

Revocable trust with a named living beneficiary.

Sole ownership specifically bequeathed in a decedent’s will.

Life insurance with a named living beneficiary.

Transfer-on-death investment account with a named living beneficiary.

Answer 17

Sole ownership specifically bequeathed in a decedent’s will.

Rationale

Any property owned solely would be included in the probate estate. Generally, the other options listed will avoid probate as long as the listed beneficiary is alive to receive the proceeds of the policy/account or trust.
If the beneficiaries have predeceased the decedent, or if beneficiaries have not been named, the proceeds will revert to the decedent’s estate and pass through probate.

Question 18

Bentley’s attorney has advised him to set up trusts to avoid probate. Which of the following statements regarding the probate process is not correct?

The distribution of probate assets can be delayed.

Through the probate process heirs and/or legatees are given clear title to the property.

Creditors are protected through the probate process.

The probate process is confidential.

Answer 18

The probate process is confidential.

Rationale

The probate process is not confidential. Certain information is required to be filed with the court and becomes public information. Options a, b, and c are true statements.

Question 19

Which of the following statements is correct about the probate process?

A surety bond always has to be posted by an administrator and an executor.

If a federal estate tax return is required to be filed, the executor must provide basis information to the IRS.

A grant of letters testamentary is provided to the estate administrator.

If an asset that is bequeathed to a legatee has been disposed of prior to the decedent’s death, the extinction of the legacy is called redemption.

Answer 19

If a federal estate tax return is required to be filed, the executor must provide basis information to the IRS.

Rationale

Option a is incorrect because the bond is not always required for the executor, if provided for by the will. Option c is incorrect, as it applies to an executor not an administrator. Option d should be ademption, not redemption.

Question 20

Sully died owning the following property. Which would not be included in Sully’s probate estate?

1. A certificate of deposit, in Sully’s name, at the local bank.
2. An interest in investment real estate held tenancy in common with Sully’s son.
3. Retirement plan proceeds made payable to Sully’s daughter.
4. A mountain vacation home Sully owns jointly (JTWROS) with his wife.

1 only.
3 and 4.
1, 2, and 3.
1, 2, and 4.

Answer 20

3 and 4.
Rationale

Items 3 and 4 are not included in Sully’s probate estate. Retirement plan proceeds payable to a listed living beneficiary transfer by contract law, and property owned JTWROS transfers by operation of state law to the surviving joint tenants. Items 1 and 2 are included in Sully’s probate estate. A certificate of deposit in Sully’s name would be included in Sully’s probate estate. Interest in property held as a tenancy in common does not have an automatic right of survivorship and thus must transfer through the probate process for retitling.

Question 21

Chelsey inherited the property listed below from her father upon his death. Which of the following property interests passed to her through probate?

A 2005 Porsche titled and held within a revocable living trust.

Chelsey’s father’s community property share of a vacation property.

A $300,000 distribution to Chelsey, as listed beneficiary, from her father’s 401(k) plan.

Title to a Manhattan condo previously owned within a trust with Chelsey listed as the beneficiary at her father’s death.

Answer 21

Chelsey’s father’s community property share of a vacation property.
Rationale

Community property passes through probate. Property held within a revocable living trust transfers per the trust document, thus avoiding the probate process.
A distribution to a listed beneficiary of a qualified retirement plan passes per contract law, thus avoiding the probate process.
Real estate included in a trust transfers per the trust document, thus avoiding the probate process.

Question 22

Which of the following items will pass through probate?

Retirement plan with someone other than the decedent listed as the beneficiary.

Investment real estate held JTWROS.

Personal residence held tenancy by the entirety.

Life insurance policy with no designated beneficiary.

Answer 22

Life insurance policy with no designated beneficiary.
Rationale

A life insurance policy without a named beneficiary is included in the decedent’s probate estate. Proceeds of a life insurance policy with a listed beneficiary pass to the listed beneficiary by contract law and avoid the probate process. An interest in property held JTWROS passes by state law to the surviving joint tenants and avoids the probate process. An interest in property held tenancy by the entirety passes by state law to the surviving spouse and avoids the probate process.

Question 23

Which of the following is a disadvantage of the probate process?

The decedent’s heirs and/or legatees are given clear title to property.

The probate process requires several court filings.

The probate process provides for an orderly distribution of the decedent’s assets.

The decedent’s creditors are protected.

Answer 23

The probate process requires several court filings.
Rationale

The probate process requires several court filings which create additional costs and becomes public information. This is a definite disadvantage to the probate process. Options a, c, and d are all advantages of the probate process.

Question 24

Krista would like to reduce the risk of public scrutiny of her assets at her death. Which of the following would not help Krista accomplish this goal?

Place all property in trust.

Retitle property so that it is titled with a survivorship feature.

Include a specific bequest of each and every item Krista owns in her will.

Use items such as annuities, PODs and TODs.

Answer 24

Include a specific bequest of each and every item Krista owns in her will.
Rationale

Krista must avoid the probate process if she wants to avoid public scrutiny. The probate estate includes any asset that must be retitled, or does not transfer by operation of law or trust document. Answer c would not help Krista accomplish her goal because even specific bequests are included in the probate estate. Property placed in trust will transfer per the trust document. Property titled with a survivorship feature will transfer per the operation of law. Items such as annuities, PODs, and TODs will transfer per contract law. All of these methods will avoid the probate process, thus helping Krista accomplish her goal of avoiding public scrutiny.

Question 25

Testate

A.A person who inherits under state intestacy laws.
B.1(of a person)not having a will; die intestate 2(of things) not disposed of by will
C.Having made and left a valid will.
D.A person who inherits real property under a valid will.
E.A person who inherits under a valid will.

Answer 25

Solution: The correct answer is C

Question 27

Legatee

A.A person who inherits under state intestacy laws.
B.1(of a person)not having a will; die intestate 2(of things) not disposed of by will
C.Having made and left a valid will.
D.A person who inherits real property under a valid will.
E.A person who inherits under a valid will

Answer 27

A person who inherits under a valid will.

Solution: The correct answer is E.

Question 28

Heir

A.A person who inherits under state intestacy laws.
B.1(of a person)not having a will; die intestate 2(of things) not disposed of by will
C.Having made and left a valid will.
D.A person who inherits real property under a valid will.
E.A person who inherits under a valid will.

Answer 28

A person who inherits under state intestacy laws.

Question 29

Devisee

A.A person who inherits under state intestacy laws.
B.1(of a person)not having a will; die intestate 2(of things) not disposed of by will
C.Having made and left a valid will.
D.A person who inherits real property under a valid will.
E.A person who inherits under a valid will.

Answer 29

D, A person who inherits real property under a valid will.

Question 30

Uncle Joe died recently. He is survived by two nieces, Rachel and Margaret. Uncle Joe owned the following property at his death.

A house he inherited from his parents.
A car owned by Uncle Joe.
A life insurance policy on his own life.

Uncle Joe’s two nieces are the beneficiaries of the policy.

A 401(k) plan without a listed beneficiary.

Uncle Joe’s will left the house to his favorite niece, Rachel, and the car to his niece, Margaret. Which of the following statements is correct?

A.All assets will be transferred via the will.

B.All assets will be transferred via the state’s intestate probate laws.

C.Some assets will be transferred via the will and the remaining assets will transfer outside the probate process.

D.Some assets will be transferred via the state’s intestate probate laws, some assets will transfer via the will and some will transfer outside the probate process.

Answer 30

Solution: The correct answer is D.

The house and the car will transfer under the will. The life insurance policy will transfer outside the probate process because of the named beneficiaries. The 401(k) plan will transfer to Uncle Joe’s probate estate because there is no listed beneficiary. Since the will does not cover the 401(k) plan, the asset will transfer via the state’s intestate succession laws.

Question 31

Which of the following is/are considered a disadvantage(s) of probate?

The process can result in delays.
The process may be expensive.
The process provides clear title to heirs and legatees.
The process is open to public scrutiny.

A.1 only
B.1 and 2
C.1, 2, and 4
D.1, 2, 3, and 4

Answer 31

Solution: The correct answer is C.

The fact that probate provides clear title to heirs and legatees is an advantage, not a disadvantage, of the process. All of the other options are disadvantages of the probate process

Question 32

Jaime, a wealthy doctor, wrote a will many years ago after his first child was born. His will leaves his home on Drury Lane to his daughter, Taylor. Jaime sold the home on Drury Lane last year and purchased a new home on Mulberry Lane.

The extinction of Taylor’s legacy is called what?

A.Abatement
B.Ademption
C.Surety
D.Letters testamentary

Answer 32

Solution: The correct answer is B.

Abatement is the reduction in an estate when there is insufficient assets to satisfy all legatee provisions. A surety bond is a bond posted by the administrator of the probate process. Letters testamentary is the document given to the executor from the probate court authorizing the executor to act on behalf of the estate.

Question 33

Which of the following assets will pass through probate?

A.A house subject to a mortgage and owned fee simple by the decedent.
B.Property held tenancy by the entirety.
C.Bank accounts with named beneficiaries.
D.None of the above will pass through probate.

Answer 33

Solution: The correct answer is A.

Answers B and C will not pass through probate because they pass by operation of law or state contract law. Answer A will pass through probate because it is owned fee simple by the decedent. The fact that the house is subject to a mortgage does not affect whether it passes through probate.