645
Chapter 52
Wills and Trusts
N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows.
N A question new to this edition of the Test Bank.
+ A question modified from the previous edition of the Test Bank.
= A question included in the previous edition of the Test Bank.
TRUE/FALSE QUESTIONS
B1. A will is a testamentary disposition of property.
B2. A will is probated in part to establish its validity.
B3. An administrator is a personal representative appointed by a court for a decedent
who dies without a will.
B4. The property of a decedent escheats to his or her designated heirs.
646 TEST BANK B—UNIT TEN: PROPERTY AND ITS PROTECTION
B5. One who dies without a valid will creates a bequest.
B6. For a will to be valid, a testator must be of “sound mind” at the time of death.
B7. Most states permit a nuncupative will if it is made before witnesses.
B8. A will must normally be attested to by two or three mentally competent witnesses.
NAT: AACSB Analytic AICPA Legal
B9. An “X” can qualify as a signature on a will.
B10. A testator may revoke a will by tearing it.
B11. A codicil is a will substitute that avoids the cost of probate.
B12. The joint ownership of property is a method of accomplishing a property transfer
without a will.
B13. If no children or grandchildren survive a decedent who dies without a will, a surviving
spouse succeeds to the entire estate.
CHAPTER 52: WILLS AND TRUSTS 647
B14. When there is no surviving spouse or child, the next in the order of inheritance are the
grandchildren.
B15. A spendthrift trust provides for a beneficiary’s transfer of his or her right to future
payments of trust funds.
B16. A trust created by a will to come into existence on the settlor’s death is an inter vivos
trust.
B17. A living trust cannot be irrevocable.
B18. A resulting trust is a trust implied in law.
B19. If a trust provides for its termination on the beneficiary’s death, the death will end the
trust.
B20. A “living will” is a will drafted and executed during a decedent’s life.
MULTIPLE CHOICE QUESTIONS
648 TEST BANK B—UNIT TEN: PROPERTY AND ITS PROTECTION
B1. Clayton dies without a will. The distribution of Clayton’s property, including his farm
near Lincoln, Nebraska, is prescribed by
a. a court-appointed executor.
b. federal probate statutes.
c. state intestacy laws.
d. Clayton’s relatives.
B2. Philomena dies without a will. A court appoints Quigley to handle the probate of
Philomena’s estate. The administrator of the estate is
a. Philomena’s closest blood relative.
b. Philomena.
c. Quigley.
d. the court.
B3. Keri’s will states, “I give to my sister Liz my condominium in Malibu, California.” This is
a. a general legacy.
b. a residuary.
c. a specific bequest.
d. a specific devise.
B4. In his will, Vigor makes a gift of $10,000 to Wylie. This is
a. a general bequest.
b. a general devise.
c. a specific bequest.
d. a specific devise.
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B5. Eighty-year-old Clark exhibits confusion, forgetfulness, and disorientation. To Clark’s
doctor Dave, the symptoms indicate dementia. Elsa, who has significant contact with
Clark, believes that he is in a state of mental decline. These facts indicate
a. an urgency that Clark distribute his assets.
b. Clark’s lack of capacity.
c. Dave’s misdiagnosis.
d. Elsa’s intent to take advantage of Clark.
B6. Char’s daughter Delsey dies before Char, leaving Delsey’s son Egor. On Char’s death, it
is learned that Char’s will gives “to my daughter Delsey my ranch in Mesquite County,
Texas.” Most likely, the gift of the ranch
a. abates.
b. will not lapse.
c. lapses in full.
d. lapses in part.
B7. One summer afternoon, Eve, Faruk, and Galen decide to each draft and sign a “Last
Will and Testament.” Eve is fifteen years old, Faruk is seventeen, and Galen is
nineteen. In most states, those with the capacity to execute a will would be
a. Eve, Faruk, and Galen.
b. Faruk and Galen only.
c. Galen only.
d. not Eve, Faruk, or Galen.
650 TEST BANK B—UNIT TEN: PROPERTY AND ITS PROTECTION
B8. For Troy’s will to be valid, he must be mentally competent at the time of
a. death.
b. the acquisition of the property to be distributed under the will.
c. the making of the will.
d. the probate of the will.
B9. Dan makes a will leaving a specific sum of money to each surviving relative. The assets
of Dan’s estate are not enough to make all of the gifts in full. This situation requires
a. an abatement.
b. a publication.
c. a residuary.
d. a revocation.
B10. Lost in a canyon near Gila, Arizona, Hedy writes her will in crayon, on a paper bag,
while Ivan states orally how he wants his estate distributed. Most states do not permit
a. an olographic will.
b. a nuncupative will.
c. a will written on a paper bag.
d. a will written in crayon.
B11. Leo is asked to serve as a witness to Mona’s will. To qualify, Leo must be
a. a collateral heir.
b. a lineal descendant.
c. eighteen years of age or older.
d. mentally competent.
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B12. Juli types onto a computer what she intends to be “My Will” and prints it out. Juli has
capacity. “My Will” is
a. invalid.
b. valid if Juli signs it.
c. valid if Juli signs it and has three witnesses sign it.
d. valid if Juli signs it, has three witnesses sign it, and files it in a certain state
office.
B13. Dyan executes her will to give “to my nephew Esau my stock in Fargo, Inc.” Later,
Dyan writes separately, with the same formalities required for a will, to leave the
stock to her niece Ginny and cash to Esau. This writing
a. does not affect the will’s gift of the stock to Esau.
b. requires a gift of the stock in equal shares to Esau and Ginny.
c. revokes the whole will, which must be redrafted.
d. revokes the will’s gift of the stock to Esau.
B14. Max is married to Nina. Max executes a will, leaving certain property to Nina and
other property to Opal, who is unrelated to Max and Nina. On Max’s death
a. neither Nina nor Opal can renounce their shares.
b. Nina and Opal can both renounce their shares.
c. Nina can take only what the will provides but Opal can renounce her share.
d. Opal can take only what the will provides but Nina can renounce her share.
652 TEST BANK B—UNIT TEN: PROPERTY AND ITS PROTECTION
B15. Lolly employs a variety of will substitutes to transfer her assets, which consist
principally of cash and investments in mutual funds, outside the probate process. In
this situation, the most important consideration is to
a. avoid the cost of probate.
b. ensure that the arrangements benefit the intended persons.
c. establish grounds for a court’s review of the arrangements.
d. follow the same principles as apply to testamentary transfers.
B16. Benny dies without a will, with no surviving spouse or child. Benny’s survivors include
his granddaughter Callie, his nephew Doug, and his cousin Earl. In most states, his
estate would pass to
a. Callie.
b. Doug.
c. Earl.
d. the state.
B17. Cliff dies without a will. His survivors include his spouse Dana and his two children,
Efrem and Fay. Under applicable laws, of Cliff’s estate, Dana will probably receive
a. everything.
b. nothing.
c. one-half.
d. one-third.
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B18. Gus dies without a will. Under applicable laws, the debts of his estate are paid by
Gus’s
a. estate, after the assets are distributed.
b. estate, before the assets are distributed.
c. heirs, after the estate’s assets are distributed.
d. heirs, before the estate’s assets are distributed.
B19. Gwyn dies without a will, survived by her nephew Halsey and her aunt Ilene. Halsey
and Ilene are Gwyn’s
a. collateral heirs.
b. grantors.
c. testators.
d. lineal descendants.
B20. Filbert wants to put some money in trust for his son Gregor, but he does not want to
lose full control over the funds in case he may need them in the future. One trust
suited to Filbert’s needs is
a. a charitable trust.
b. a constructive trust.
c. a spendthrift trust.
d. a Totten trust.
ESSAY QUESTIONS
B1. Tundi’s will provides for a distribution of her assets on her death. Who “distributes”
this property, and what are the steps involved?
654 TEST BANK B—UNIT TEN: PROPERTY AND ITS PROTECTION
B2. Dharma is the trustee of a trust in which Elin has a life estate and Frank has the
remainder interest. The trust property is a farm. The farm is leased to Glen, who pays
the rent to the trust. Property taxes are paid annually on the farm. Long-term
improvements are occasionally made and paid for. A section of the farm’s land is sold
to Haruo, one of the farm’s neighbors. How are the payments for taxes and
improvements classified (ordinary or extraordinary)? How are the receipts of rent and
the proceeds from the land sale classified? To whom are these costs and benefits
allocated?