G.54 Property titling and beneficiary designations Flashcards
Learners will better understand the intricacies of property titling and beneficiary designations for effective estate planning and asset transfer strategies.
Jane and Mike are married and own their home as joint tenants. If Mike passes away, what happens to his interest in the property?
A. Goes through probate
B. Automatically transfers to Jane
C. Is distributed according to his will
D. Is given to Mike’s children from a previous marriage
B. Automatically transfers to Jane.
G.54 Property titling and beneficiary designations
Which type of property title allows ownership shares to be unequal between owners?
A. Joint Tenancy
B. Tenancy in Common
C. Community Property
D. Tenancy by the Entirety
B. Tenancy in Common.
G.54 Property titling and beneficiary designations
Sarah wants to ensure her property avoids probate but wants to retain full control of it during her lifetime. Which option might she consider?
A. Life Estate
B. Joint Tenancy
C. Sole Ownership
D. Tenancy in Common
A. Life Estate
G.54 Property titling and beneficiary designations
Which property title means that each person owns the property in entirety and it is generally only for married couples or registered domestic partners?
A. Joint Tenancy
B. Tenancy by the Entirety
C. Community Property
D. Tenancy in Common
B. Tenancy by the Entirety
G.54 Property titling and beneficiary designations
Helen owns a property in which she has total control and decision-making power. What type of ownership does Helen have?
A. Sole Ownership
B. Joint Tenancy
C. Tenancy in Common
D. Community Property
A. Sole Ownership
G.54 Property titling and beneficiary designations
In which type of property title does the death of one tenant not automatically transfer the share to the survivors?
A. Joint Tenancy
B. Tenancy in Common
C. Tenancy by the Entirety
D. Community Property
B. Tenancy in Common
G.54 Property titling and beneficiary designations
Margaret, a widow with two adult children, recently passed away. Her will explicitly states that her beach house should go to her lifelong friend, Susan. Meanwhile, her substantial investment portfolio is not mentioned in the will. In the context of estate planning and based on Margaret’s situation, identify who is the heir and who is the legatee, and explain the difference between them.
A. Susan is the heir because she is receiving an item specifically bequeathed in the will, and Margaret’s children are legatees because they will inherit the unmentioned investment portfolio.
B. Susan is the legatee because she is receiving an item specifically bequeathed in the will, and Margaret’s children are heirs because they are next of kin.
C. Margaret’s children are heirs because they were specifically mentioned in the will, and Susan is the legatee because she is next of kin.
D. Susan is the heir because she is not a family member, and Margaret’s children are legatees because they are family members.
B. Susan is the legatee because she is receiving an item specifically bequeathed in the will, and Margaret’s children are heirs because they are next of kin.
G.54 Property titling and beneficiary designations
Jane, a resident of Florida, owns a vacation home in California. Upon her death, her will specifies that her son, Tom, is to inherit all her real estate holdings. While Tom expects to manage the probate process in Florida, he is unsure about how to handle the vacation home in California. Which of the following is the most accurate statement regarding Tom’s situation in handling his mother’s estate?
A. The vacation home in California will be handled through the probate process in Florida because that’s where Jane was a resident.
B. Tom will need to manage an ancillary probate process in California for the vacation home, in addition to the primary probate process in Florida.
C. Probate is not necessary in California because the will clearly names Tom as the beneficiary.
D. Tom should sell the vacation home immediately to avoid all probate processes.
B. Tom will need to manage an ancillary probate process in California for the vacation home, in addition to the primary probate process in Florida.
G.54 Property titling and beneficiary designations
Emily and Jacob, a married couple, amassed various assets during their 15-year residence in State A, a community property state. Recently, they moved to State B, which adheres to common law property rules. Jacob, a savvy investor, successfully accumulated significant investment assets registered solely under his name during their stay in State A. Upon moving to State B, he continued to manage those investments proficiently. In the context of estate planning, the couple is considering how their assets, particularly Jacob’s investment, might be treated for estate tax purposes in State B if Jacob were to predecease Emily.
Which of the following best describes the potential estate tax treatment of Jacob’s investment assets in State B?
A. The investment assets will be treated wholly as Jacob’s separate property because they moved to a common law state.
B. The entire value of the investment assets will be considered community property, subject to a 50/50 division between Jacob and Emily for estate tax purposes.
C. A portion of the investment assets may be treated as quasi-community property, considering a fraction as Jacob’s separate property and a fraction as community property for estate tax purposes.
D. The investment assets will be exempted from estate tax in State B since they were accumulated while the couple was residing in a community property state.
C. A portion of the investment assets may be treated as quasi-community property, considering a fraction as Jacob’s separate property and a fraction as community property for estate tax purposes.
G.54 Property titling and beneficiary designations
Mr. Thompson, a widowed individual with considerable wealth, is in the process of structuring his estate plan with the assistance of his Certified Financial Planner (CFP). He holds various assets in the form of real estate, stocks, and collectibles and wants to ensure a systematic distribution to his heirs while optimizing for tax efficiency. His estate consists of the following assets:
A vacation home in Florida
An investment portfolio consisting of various stocks and bonds
A collection of vintage cars
Intellectual property in the form of patents from his inventions
In the context of estate planning, how should a CFP classify each of Mr. Thompson’s assets?
A. Real Property: Vacation home; Tangible Property: Vintage cars; Intangible Property: Stocks and Patents.
B. Real Property: Stocks; Tangible Property: Vacation home and Patents; Intangible Property: Vintage cars.
C. Real Property: Patents; Tangible Property: Vacation home; Intangible Property: Stocks and Vintage cars.
D. Real Property: Vintage cars; Tangible Property: Patents; Intangible Property: Vacation home and Stocks.
A. Real Property: Vacation home; Tangible Property: Vintage cars; Intangible Property: Stocks and Patents.
G.54 Property titling and beneficiary designations
Mark, a Certified Financial Planner, is working with the Smith family to optimize their estate plan. Mr. Smith has recently purchased a piece of real estate and wishes to transfer the property to his son, John, in a manner that allows him to have control over the property during his lifetime but assures that John will inherit it upon his death. Mark is considering the difference between fee simple ownership and equitable ownership in order to provide the best advice to Mr. Smith. Which of the following options best represents a scenario that applies the concept of equitable ownership?
A. Mr. Smith holds the property in fee simple, granting him complete ownership and control over the property, including the right to bequeath it.
B. Mr. Smith creates a life estate, retaining the right to use the property during his lifetime (life tenancy) and naming John as the remainderman who will gain full ownership upon Mr. Smith’s death.
C. John obtains a mortgage, making him the equitable owner, while Mr. Smith provides a personal guarantee on the loan.
D. Mr. Smith transfers the property to John now, with no reserved rights to use or derive income from it.
B. Mr. Smith creates a life estate, retaining the right to use the property during his lifetime (life tenancy) and naming John as the remainderman who will gain full ownership upon Mr. Smith’s death.
G.54 Property titling and beneficiary designations
Sarah, a widow, has an only daughter, Lisa, and two grandchildren from Lisa. Sarah owns a valuable piece of real estate that has been in the family for generations. She wants to ensure that Lisa can live in the property for her entire life but also wants to make sure that upon Lisa’s death, the property is passed down directly to her grandchildren, avoiding any claims that Lisa’s potential future spouse may have on the property. Sarah’s estate planning attorney discusses the concepts of a “term interest” and a “life estate” with her.
Which of the following statements best describes a key difference between a term interest and a life estate, and which option might be most suitable for Sarah’s objective?
A. A term interest allows Lisa to live in the property for a specified period while a life estate allows Lisa to live there for her entire life; Sarah should choose a term interest to ensure the property goes to her grandchildren.
B. A term interest allows Lisa to live in the property for her entire life while a life estate restricts her stay for a specified period; Sarah should choose a term interest to secure lifelong residence for Lisa.
C. A term interest allows Lisa to live in the property for a specified period while a life estate allows Lisa to live there for her entire life; Sarah should choose a life estate to secure lifelong residence for Lisa and ensure that the property goes to the grandchildren upon Lisa’s death.
D. Both term interest and life estate allow Lisa to live in the property for her entire life, but only a term interest ensures the property passes to the grandchildren; hence, Sarah should choose a term interest.
C. A term interest allows Lisa to live in the property for a specified period while a life estate allows Lisa to live there for her entire life; Sarah should choose a life estate to secure lifelong residence for Lisa and ensure that the property goes to the grandchildren upon Lisa’s death.
G.54 Property titling and beneficiary designations
Margaret and Richard are a married couple residing in a state that recognizes all forms of co-ownership. They have recently purchased a vacation home and are in the process of deciding how to title the property in a manner that best fits their estate planning needs. Margaret has a son from a previous marriage, John, and wants to ensure that he inherits her share of the property upon her death. Richard, who does not have any children of his own, wishes to live in the property until his death even if Margaret predeceases him. Additionally, they want to make sure that their ownership share is protected from any individual creditors.
Given their needs and based on your knowledge of Joint Tenancy with Right of Survivorship (JTWROS), Tenancy in Common (TIC), and Tenancy by the Entirety (TBE), which form of property title should they likely consider?
A. Joint Tenancy with Right of Survivorship (JTWROS)
B. Tenancy in Common (TIC)
C. Tenancy by the Entirety (TBE)
D. Neither A, B, nor C satisfies all their needs
B. Tenancy in Common (TIC)
Margaret and Richard have multiple needs to address: ensuring Richard can remain in the property, ensuring Margaret’s son can inherit her share, and providing some form of creditor protection. Here’s why TIC might be the most appropriate choice given the scenario:
JTWROS would not satisfy Margaret’s desire to have her son inherit her share of the property because JTWROS comes with the right of survivorship, meaning that if Margaret predeceased Richard, her interest in the property would automatically pass to Richard, not John.
TIC allows Margaret and Richard to own unequal or equal shares of the property and does not have an inherent right of survivorship. Upon Margaret’s death, her share can pass to her son John, satisfying her need. However, it should be noted that TIC doesn’t provide the creditor protection they wanted and doesn’t inherently allow Richard to live in the property until his death if Margaret predeceases him – but with a proper will or additional planning, they might work around these issues.
TBE generally provides good creditor protection and the right of survivorship, but it would not allow Margaret’s portion of the property to pass to John upon her death, as the property would automatically transfer to Richard.
Therefore, while TIC addresses some of their needs, additional estate planning tools (like a will or trust) might be necessary to fully address all the needs and considerations of Margaret
G.54 Property titling and beneficiary designations
Marcia, a widow, is considering how best to manage her estate, ensuring that her only daughter, Lisa, can reside in her property after her passing, while also ensuring that the property ultimately goes to her grandson, Tim, upon Lisa’s death. Her financial planner presents her with two options: establishing a Life Estate or creating a Usufruct. Which of the following statements accurately represents a key difference between a Life Estate and a Usufruct, which might influence Marcia’s decision?
A. A Life Estate permits the life tenant to sell the property, while a Usufruct does not.
B. A Life Estate automatically transfers ownership to the remainderman upon death of the life tenant, while a Usufruct can bequeath the usage rights to heirs in a will.
C. A Usufruct allows the usufructuary to have a right of survivorship, while a Life Estate does not.
D. Both Life Estate and Usufruct allow the beneficiary to sell the property without the consent of the future interest holder.
B. A Life Estate automatically transfers ownership to the remainderman upon death of the life tenant, while a Usufruct can bequeath the usage rights to heirs in a will.
G.54 Property titling and beneficiary designations
Samantha, a Certified Financial Planner, is working with a client, Mr. Thompson, who has residences in two different states: Florida and New York. He spends winters in Florida and the rest of the year in New York. Mr. Thompson expresses a concern regarding which state will be considered his domicile for estate tax purposes upon his death, as the two states have significantly different estate tax regimes. Which of the following recommendations should Samantha prioritize to help establish Mr. Thompson’s domicile in Florida, which does not levy a state estate tax?
A. Advise Mr. Thompson to spend equal time in both residences, maintaining meticulous records.
B. Advise Mr. Thompson to sell his New York residence and solely live in Florida.
C. Advise Mr. Thompson to declare his Florida residence as his domicile in his will.
D. Advise Mr. Thompson to take affirmative steps like registering to vote, obtaining a driver’s license, and filing income taxes in Florida.
D. Advise Mr. Thompson to take affirmative steps like registering to vote, obtaining a driver’s license, and filing income taxes in Florida.
.
G.54 Property titling and beneficiary designations
