15. Preserving Your Estate
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1. Estate planning requires the knowledge of wills, trusts, and taxes.
a. True
b. False
2. Liquidity is important in an estate to pay for death costs and possible taxes.
a. True
b. False
3. People planning means providing sustenance and resources for family members by anticipating their future needs.
a. True
b. False
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4. Insufficient capital can cause problems in estate planning.
a. True
b. False
5. The gross estate includes all property you own that is subject to federal estate taxes at your death.
a. True
b. False
6. Joint ownership of assets is an effective substitute for a will.
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a. True
b. False
7. A trustee is the person who writes a will.
a. True
b. False
8. Charitable contributions given during one’s lifetime provide an income tax deduction and remove property from the
estate.
a. True
b. False
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9. When the first spouse dies, then any unused applicable exclusion is lost and cannot be used.
a. True
b. False
10. The taxable estate is less than the adjusted gross estate.
a. True
b. False
11. The insurance policy transferred to a life insurance trust will reduce the transfer taxes.
a. True
b. False
15. Preserving Your Estate
15. Preserving Your Estate
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14. A credit shelter trust produced the same effect as the portability rule.
a. True
b. False
15. Since 2011, a surviving spouse cannot use the unused unified transfer tax (UTT) credit of the deceased spouse.
a. True
b. False
16. A unified transfer tax (UTT) credit is unique to an individual.
a. True
b. False
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17. _____ would be a first-level death-related cost.
a. Funeral expenses
b. Federal estate taxes
c. Probate expenses
d. Inheritance taxes
e. Administrative costs
18. Which of the following leads to the breakup of an estate?
a. Death-related costs
b. The presence of probate estates
c. The proper use of vehicles of transfer
d. Highly liquid assets
e. The availability of a will
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19. Which of the following statements about the review of estate plans is true?
a. Estate planning and review is a very simple process that doesn’t require professional assistance.
b. Periodic reviews and revisions are required to update the plan.
c. Life events like disability and job change do not influence the review of estate plans.
d. Estates are exempted from taxes when there is an intestacy, which makes a review process redundant.
e. Transfer costs are not applicable to the transfer of estates and, therefore, will not affect the review plan.
20. The objective of estate planning is to:
a. avoid the disposition of assets to the possible beneficiaries.
b. maximize the taxes involved in the transfer of assets.
c. create a situation of intestacy.
d. determine how to invest the estate’s assets after your death.
e. maximize the usefulness of people’s assets during their lives.
21. The disposition of property involves:
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a. distributing residual assets after specific gifts have been made.
b. allocating the burden of taxes to the beneficiaries.
c. signing the will to prevent fraud.
d. creating a situation of intestacy.
e. appointing the executors.
22. A written and legally enforceable document expressing how a person’s property should be distributed upon his or her
death is known as a(n):
a. will.
b. ethical paper.
c. memorandum.
d. letter of last instructions.
e. power of attorney.
23. A form of joint ownership that may exist only between husband and wife is:
a. joint tenancy.
b. joint tenancy with right of survivorship.
c. joint tenancy without right of proprietorship.
d. tenancy in common.
e. tenancy by the entirety.
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24. _____ has no right of survivorship.
a. A co-owner tenancy
b. A joint tenancy
c. A tenancy in common
d. A settlor tenancy
e. A tenancy by the entirety
25. A _____ gives the rights of survivorship to the other owner of a property.
a. joint tenancy
b. grantor property
c. tenancy in common
d. tenancy by the beneficiary
e. community property
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26. Which of the following best describes a situation of intestacy?
a. George has insufficient medical insurance to cover the cost of medical treatment he needs.
b. Jill died without heirs.
c. Eduardo became physically challenged after he was injured in a car accident.
d. Lily died without a valid will.
e. Mason died without any probate property.
27. You have a spouse, two children, three brothers, one grandchild, and a living father. If you died without a valid will,
the person(s) most likely to receive the proceeds of your estate would be your:
a. grandchildren.
b. spouse.
c. parents.
d. brothers.
e. friends.
28. A document that legally modifies a will without revoking it is called a(n):
a. codicil.