Lesson 2: Basic Estate Planning Documents Flashcards
Which of the following powers given to an individual would cause the power to be deemed a general power of appointment?
A) The power to use your money only to pay your own creditors
B) The power to sell and buy property on your behalf
C) The power to use your money to pay the powerholder’s creditors
D) The power to make gifts to your heirs and charities
The correct answer is (C).
The power to pay the powerholder’s own creditors creates a general power of appointment over the assets. The other powers do not benefit the power holder and thus do not create a general power of appointment.
Making arrangements to deal with the possibility of physical or mental incapacity is an important area of estate planning. Which of the following arrangements may be used to deal with such an unexpected incapacity?
I. Springing durable power of attorney
II. Revocable living trust
III. QTIP
IV. A living will
A) I only
B) II and IV
C) I, II, and IV
D) I, II, III, and IV
The correct answer is (C).
A QTIP is not an arrangement that deals with unexpected incapacity. All of the other arrangements are methods of dealing with some unexpected incapacity.
Josephine, who is single, drafted her own will using the “Zoom Wills” software that she purchased on the internet. She sends it to you for a review. In your first review of the will, you look for which of the following common provisions?
A) A statement of the domicile of the testator
B) A simultaneous death clause
C) A specific bequest of property owned JTWROS
D) A self-proving clause
The correct answer is (A).
A statement of the domicile of the testator is a provision commonly found in a will. Neither a simultaneous death clause nor a self-proving clause are as important as the statement of domicile. Property-owned tenancy by the entirety transfers by operation of law and is not disposed of through a will.
Bill has a general power of appointment over all of his father’s assets. Which of the following statements regarding his power of appointment is not true?
A) Bill can appoint his father’s money to pay for the needs of his father.
B) Bill can appoint money to his own creditors.
C) Bill must only appoint money using an ascertainable standard.
D) If Bill predeceases his father, Bill’s gross estate would include his father’s assets even though they had not been appointed previously to Bill.
The correct answer is (C).
Answers (A), (B), and (D) are all true. Because Bill has a general power of appointment over his father’s assets, Bill may appoint those assets to anyone for any reason, and he is not limited by an ascertainable standard such as health, education, maintenance, or support.
Harold, a non-attorney, prepares his own will. Harold handwrites all of the provisions of the will and signs and dates it but fails to have it witnessed by anyone. What type of will does Harold have, if any?
A) A holographic will
B) A nuncupative will
C) A statutory will
D) Harold does not have a will.
The correct answer is (A).
A holographic will is one that is handwritten, signed and dated for a state that accepts such a will. Answer (B) is incorrect because a nuncupative will, which is not valid in all states, is an oral will. Answer (C) is incorrect because a statutory will generally must be prepared by an attorney and must be witnessed.
Which decedent died intestate?
A) The decedent handwrote a will that was signed but was not dated or witnessed.
B) The decedent was of “sound mind” when he signed his statutory will.
C) The decedent prepared a last will and testament with an attorney.
D) The decedent made an oral “dying declaration.”
The correct answer is (A).
Option (A) describes an invalid holographic will. If the decedent dies without a valid will, he is said to have died intestate. Option (B) describes a situation in which the testator is “of sound mind” and therefore can make a valid will. Option (C) describes a validly written will. Option (D) describes a nuncupative will.
Which of the following is (are) key parties to a power of attorney?
A) The principal
B) The guardian ad litem and the agent
C) The principal and the agent
D) The attorney who prepares the power of attorney, the principal, and the agent
The correct answer is (C).
The parties to a power of attorney are the principal and the agent.
An attorney prepares a will for Joe in which Joe leaves everything to his wife, Carmella. Joe’s neighbor, Vicki, is one of the witnesses to the will. His close friend, Jack, is another witness. Which of these people is the testator?
A) Carmella
B) Joe
C) Vicki
D) Jack
The correct answer is (B).
Joe is the testator: the person making the will.
Which of the following documents is used to modify a will?
A) Nuncupative agreement
B) Codicil
C) Holographic declaration
D) Statutory agreement
The correct answer is (B).
A codicil is used to modify a will.
When Ron died, he held a power of appointment over a piece of property under which he could only appoint the property to someone other than himself, his creditors, his estate or its creditors. What type of power is this?
A) A general power of appointment
B) A special power of appointment
C) A power of property appointment
D) A half power of attorney
The correct answer is (B).
This type of power is called a special power or a limited power. A general power allows appointment of assets to anyone.
