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1. The Uniform Probate Code has been adopted in all states.
a.
True
b.
False
2. Estate planning has two primary goals: to ensure property is distributed as the owner desires and to minimize estate
taxes.
a.
True
b.
False
3. Per capita means each heir gets an equal share of an estate.
a.
True
b.
False
4. A later will revokes a prior will only if that revocation is clearly stated.
a.
True
b.
False
5. Parents may not disinherit their minor children without good reason.
a.
True
b.
False
6. Property of a person who dies without a will is distributed according to intestacy laws.
a.
True
b.
False
7. In purchasing life insurance, Kelsey concealed the fact that she has a muscular disease. The insurance company can
void the policy if the muscular disease is found to be a material fact.
a.
True
b.
False
8. Victor purchased $1 million of insurance on his home even though the house was only worth $500,000. Victor's house
was destroyed by lightning. Under the insurance policy, Victor will be able to recover $1 million.
a.
True
b.
False
9. Reva prepares and signs a document that she intends to be her will. If she has not followed the legal technicalities of her
state regarding executing a will, the court may not enforce the will.
a.
True
b.
False
10. The percentage of a decendent's estate that a spouse can claim is called a forced share.
a.
True
b.
False
11. Jose and Juanita are first cousins. Jose lives in San Francisco, California; Juanita lives in Toronto, Canada. The two
have met only once in life, and may never meet again. Nonetheless, because they are blood relatives, Juanita has an
insurable interest in Jose's life.
a.
True
b.
False
12. The only function of a will is to dispose of a person's property upon death.
a.
True
b.
False
13. Jacob has been quite ill. When three of his neighbors come to visit one day, he tells them that he is dying and that he
wants them to witness his oral will. In some states, he can validly dispose of his personal property by his witnessed, oral
statements.
a.
True
b.
False
14. An executor who is related to the testator is not entitled to compensation.
a.
True
b.
False
15. April purchased a life insurance policy on herself. On her death, the proceeds of the insurance were to be paid to her
minor child, Ryan. Ryan is the beneficiary.
a.
True
b.
False
16. The percentage of people dying without a will is approximately
a.
5%.
b.
25%.
c.
65%.
d.
90%.
17. Which of the following property is NOT affected by a will?
a.
life insurance
b.
personal property
c.
anatomical gifts
d.
individual bank accounts
18. Myron had two children, Cheryl and Pete, who predeceased him. Cheryl had three children and Pete had one child.
Myron had a will. Which of the following is true?
a.
If Myron's will indicates that the issue are to inherit per stirpes, Pete's child will receive one half of Myron's
estate.
b.
If Myron's will indicates that the issue are to inherit per stirpes, Pete's child will receive one fourth of Myron's
estate.
c.
If Myron's will indicates that the issue are to inherit per capita, Pete's child will receive one half of Myron's
estate.
d.
If Myron's will indicates the issue are to inherit per capita, each of Cheryl's children will receive one sixth of
Myron's estate.
19. A trust created in a will is
a.
an inter vivos trust.
b.
a constructive trust.
c.
a testamentary trust.
d.
a probate trust.
20. Legal requirements for a will depend on state law, but generally include all but which of the following?
a.
A writing
b.
Signatures of at least three witnesses
c.
The testator’s signature
d.
Witnesses who will not inherit under the will
21. Lying on her hospital bed alone one night, Phyllis grabs a pen and paper. With the last of her strength, she wrote her
last will and testament leaving all her worldly possessions to her next-door neighbor, Aaron. This type of will is
a.
a nuncupative will.
b.
a disinherited children's share will.
c.
a holographic will.
d.
illegal in all states.
22. Which of the following is NOT required to create a valid trust?
a.
Legal age and sound mind of the grantor
b.
Witnesses
c.
A beneficiary(ies)
d.
Property transferred to the trust
23. In order to travel extensively and not worry about handling her affairs, Lee transfers most of her assets into a trust,
with her bank serving as trustee. She has created ________ trust.
a.
a travel
b.
a testamentary
c.
a constructive
d.
an inter vivos
24. Joel is displeased with his son’s lifestyle choices and, instead of dividing his estate, Joel wants to leave all of his
property to his daughter, Marie, when he dies. Joel may
a.
not leave everything to his daughter and nothing to his son. If Joel tries to do this, his son can take a forced
share of his father’s estate.
b.
disinherit his son, but he must indicate in the will his reason for doing so.
c.
disinherit his son for any reason as long as Joel indicates in the will that the son was omitted on purpose.
d.
disinherit his son only if Joel leaves the son a nominal amount, such as $1.
25. Which of the following does NOT act as a revocation of a will?
a.
Creating a codicil
b.
The testator's putting an X through it
c.
Physically destroying the will by intentionally shredding it
d.
Signing a new will that expressly revokes prior wills
26. Dr. Gavornne advises his very ill patients to prepare a living will. The purpose of a living will is to
a.
make a disposition of property.
b.
express a desire not to have extreme medical treatment that would prolong their lives.
c.
transfer life insurance.
d.
consent to organ donation.
27. Insurance obtained by a limited partnership on the life of the general partner would be
a.
double indemnity insurance, because both the limited partnership and the general partner are insured.
b.
key person life insurance, because the general partner is a key person, contributing a great deal to making the
business successful.
c.
a co-insurance policy because both the limited partnership and the general partner are insured.
d.
whole life or straight life insurance which builds a cash value.
28. Which of the following is true about wills?
a.
A will can be amended to change specific terms by execution of a codicil.
b.
The testatrix cannot disinherit her minor children without stating a reason in the will.
c.
If the will meets the legal technicalities, the surviving spouse cannot override it.
d.
Once a will is written, it cannot be changed.
29. Under the Uniform Anatomical Gift Act,
a.
an individual may indicate the desire to be an organ donor by putting a provision in his will. The provision
will take effect after probate of the will.
b.
the willingness to be an organ donor may be indicated by signing an organ donation card in the presence of
one disinterested witness.
c.
family members of a decedent have no right to make a gift of the decedent’s organs if the decedent did not
make an affirmative indication of the desire to be a donor during her lifetime.
d.
an effective donation may be made by an individual in a will or on a witnessed organ-donation card or by
family members after the person’s death as long as the person did not indicate a desire not to be a donor.
30. If Walter becomes incompetent to manage his affairs,
a.
his chosen attorney-in-fact can make decisions for him if he appointed the person in a durable power of
attorney with a springing power to become effective upon Walter’s incompetence.
b.
a court will allow an immediate family member to manage his affairs.
c.
his will becomes effective, and his executor or executrix will manage his business and personal decisions.
d.
his property will be placed in a trust until such time as he is able to manage his affairs himself.
31. Which of the following is generally covered under casualty insurance?
a.
Employee theft or embezzlement
b.
Disability
c.
Transportation insurance
d.
Vandalism to property
32. An insurance policy must meet which of the following?
a.
state statutory requirements for tort law
b.
federal statutory requirements for tort law
c.
common law requirements for contracts
d.
common law requirements for tort law
33. Sarah has car insurance. While driving her automobile, Sarah negligently ran a red light and hit Vi's car. Which type
of coverage will pay for the damage done to Vi's car?
a.
liability insurance
b.
comprehensive insurance
c.
accident insurance
d.
uninsured motorist insurance
34. Abraham has just purchased his first car. His bank, First State Bank, loaned him the money to buy the car and has
required him to purchase insurance to protect the car as the collateral for the loan. Which basic types of coverage should
Abraham buy to satisfy the bank requirement and to best protect himself from the risks of operating an automobile?
a.
collision coverage only
b.
collision and comprehensive coverage only
c.
collision, uninsured motorist, and comprehensive coverage
d.
collision, uninsured motorist, comprehensive, and liability coverage
35. Pamela applies for a life insurance policy with Forever Young Insurance Company. When completing the application
form about past surgeries, Pamela forgot about a past outpatient surgery when she had an infected hang-nail removed and
her toe treated. One year after issuing the policy, Pamela died suddenly from a brain aneurysm. Forever Young denies
payment under the policy based on misrepresentation. If Pamela's sister, Paula, sues Forever Young, she will most likely
a.
win, because once an application has been accepted, an insurer may not use a misrepresentation on the
application to avoid liability.
b.
win, because Pamela's misrepresentation was not a material fact and did not increase Forever Young's risk in
insuring Pamela's life.
c.
lose, because Pamela's application contained a misrepresentation of material fact.
d.
lose, because an insurer can always use any misrepresentation on an application to avoid paying.
36. Under which of the following does the insurer promise to pay the insured a fixed yearly amount, as guaranteed
income, after the insured attains a specified age?
a.
straight life policy
b.
whole life policy
c.
universal life policy
d.
deferred annuity contract
37. Darcy buys a life insurance policy on her own life, under which she pays the annual premiums. The insurance is
issued for a specific period, but is renewable for similar periods. Darcy is covered only as long as she makes the
payments. There is no cash value portion to the policy. Darcy probably owns
a.
whole life insurance.
b.
key-person life insurance.
c.
term life insurance.
d.
an annuity.
38. Which of the following insurance policies continues for a stated period of time with the premiums increasing with the
age of the insured?
a.
double indemnity
b.
term insurance
c.
annuity contract
d.
comprehensive insurance
39. Liability policies, such as personal liability, professional malpractice, or business liability insurance, do NOT protect
the insured against
a.
a personal injury on the insured's property, such as the mail carrier who slips and falls on the owner's sidewalk.
b.
intentional harm caused by the insured.
c.
claims for property damaged by the insured.
d.
someone injured by the insured away from home or business.
40. The major disadvantage of a trust is
a.
expense.
b.
lack of privacy.
c.
an often lengthy probate process.
d.
lack of control.
41. Discuss the differences between a will and a trust.
42. Singleton, an eighty-year-old widower, remarried. The next day, he made a will leaving everything to his son, Joey. A
week after his marriage, Singleton died. How will his estate be handled?
43. Insurance policies often contain a covenant of good faith and fair dealing. Even if the clause is not in the policy, often
courts will imply it. Explain the covenant of good faith and fair dealing and provide an example illustrating when an
insurance company might breach this covenant.
44. Identify four ways a trust can be terminated.
45. Mountain Ridge Bank has been named trustee for a $100,000 trust Fred and Martha Betts established for “the living
children of the grantors.” List the requirements for establishing a trust. Identify the primary obligation of the trustee and
discuss the fiduciary duty of the trustee.
