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Chapter 15—Preserving Your Estate
1. The main objective of estate planning is to save attorney's fees.
a.
True
b.
False
2. Successful estate planning requires knowledge of wills, trusts, and taxes.
a.
True
b.
False
3. A potential estate planning problem is improper distribution of assets.
a.
True
b.
False
4. People planning means providing sustenance and resources for family members.
a.
True
b.
False
Chapter 15—Preserving Your Estate
5. Insufficient capital can cause problems paying estate taxes.
a.
True
b.
False
6. More damage is done to estates by doing nothing than by doing the wrong thing.
a.
True
b.
False
7. Custodial accounts are used to protect the property of minor children.
a.
True
b.
False
Chapter 15—Preserving Your Estate
8. Funeral expenses are examples of second-level death-related costs.
a.
True
b.
False
9. Minors can handle large sums of money and property.
a.
True
b.
False
10. Property held in different states does not complicate the estate planning process.
a.
True
b.
False
11. Estate planning usually occurs during the last ten years of a person's life.
a.
True
b.
False
Chapter 15—Preserving Your Estate
12. If there is no estate plan in place, state and federal laws control the disposition of assets.
a.
True
b.
False
13. Disability is a common reason for estates to break up.
a.
True
b.
False
14. Inflation is a common reason for estates to break up.
a.
True
b.
False
Chapter 15—Preserving Your Estate
15. Estate planning is one of the key elements of personal financial planning.
a.
True
b.
False
16. Liquidity is important in an estate to pay for death costs and possible taxes.
a.
True
b.
False
17. Probate property includes only real property.
a.
True
b.
False
18. Your gross estate is all property subject to federal tax at your death.
a.
True
b.
False
Chapter 15—Preserving Your Estate
19. Your gross estate is composed only of nonprobate property.
a.
True
b.
False
20. The two main areas of estate planning are asset planning and probate planning.
a.
True
b.
False
21. Updating an estate plan is a critical part of the estate planning process.
a.
True
b.
False
Chapter 15—Preserving Your Estate
22. If there is no will, a judge will decide who gets your children.
a.
True
b.
False
23. Dying intestate means dying with a valid will.
a.
True
b.
False
24. An estate plan is good only as long as it fits the needs, desires, and circumstances of the parties involved.
a.
True
b.
False
25. A will is required by state law.
a.
True
b.
False
Chapter 15—Preserving Your Estate
26. Intestacy results from dying without a valid will.
a.
True
b.
False
27. If you die intestate, federal law dictates the disposition of your estate.
a.
True
b.
False
28. Only the wealthy need an attorney to prepare their wills.
a.
True
b.
False
Chapter 15—Preserving Your Estate
29. The intestate process is federally mandated, and is similar from state to state.
a.
True
b.
False
30. The prolonged and expensive disability of a family wage earner is often called a working death.
a.
True
b.
False
31. Gathering data on all aspects of the family is an important estate planning function.
a.
True
b.
False
32. The testator of a will always receives property from the will.
a.
True
b.
False
Chapter 15—Preserving Your Estate
33. The appointment clause affirms that the will in question was really made out by the deceased.
a.
True
b.
False
34. A will may be invalid if the testator was under undue influence of another person.
a.
True
b.
False
35. Typically, a will must be signed by two witnesses to be valid.
a.
True
b.
False
Chapter 15—Preserving Your Estate
36. A codicil is a simple and convenient legal means of modifying a will.
a.
True
b.
False
37. The majority of Americans have valid wills.
a.
True
b.
False
38. In most states, divorce creates an automatic revocation or modification of a will.
a.
True
b.
False
39. If a person without relatives dies with a valid will, his or her property will go to the state.
a.
True
b.
False
Chapter 15—Preserving Your Estate
40. The appointment clause in a will determines the county that will have legal jurisdiction.
a.
True
b.
False
41. One should make copies of his will and store them in different places.
a.
True
b.
False
42. A letter of last instructions is a legal document.
a.
True
b.
False
Chapter 15—Preserving Your Estate
43. Mental capacity requires an individual to be at least 21.
a.
True
b.
False
44. Proof of mental capacity lies on the person contesting a will, not on the individual writing a will.
a.
True
b.
False
45. The revocation statement in a will directs the estate to make certain payments of expenses.
a.
True
b.
False
46. A will should be destroyed after a codicil is written.
a.
True
b.
False
Chapter 15—Preserving Your Estate
47. A will is revoked if a second legitimate will is created.
a.
True
b.
False
48. Death will erase any debts existing at that time.
a.
True
b.
False
49. Bequests to close relatives who die before the testator will go to the relative's heirs unless the will includes other
directions.
a.
True
b.
False
Chapter 15—Preserving Your Estate
50. A trust is a means of transferring property.
a.
True
b.
False
51. The best choice for a trustee is a family member.
a.
True
b.
False
52. All living trusts are revocable.
a.
True
b.
False
53. A testamentary trust is established in a will.
a.
True
b.
False
Chapter 15—Preserving Your Estate
54. The recipient of the gift will pay any gift tax that is due.
a.
True
b.
False
55. Any future appreciation of gifted property is excluded from the estate.
a.
True
b.
False
56. Trusts facilitate the transfer of property and the income from that property to another party.
a.
True
b.
False
Chapter 15—Preserving Your Estate
57. Trustees receive the benefits from a trust.
a.
True
b.
False
58. It is best to name an older person as the trustee.
a.
True
b.
False
59. If a gift is so large that taxes are due, the money used to pay the taxes is removed from the estate.
a.
True
b.
False
60. Gift giving can reduce estate tax liability.
a.
True
b.
False
Chapter 15—Preserving Your Estate
61. The taxable estate is less than the adjusted gross estate.
a.
True
b.
False
62. The federal estate tax applies to certain property transfers made during a person's lifetime.
a.
True
b.
False
63. If a life insurance owner-insured gives away the policy within five years of his death, the proceeds will be included in
his estate.
a.
True
b.
False
Chapter 15—Preserving Your Estate
64. Maxine's estate is worth $600,000. It will not be subject to federal estate taxes.
a.
True
b.
False
65. The estate exclusion amount increased to $5,340,000 in 2015.
a.
True
b.
False
66. The taxable estate is the fair market value of all property in which the decedent had an interest and that is required to
be included in the estate.
a.
True
b.
False
67. Jill and Jack are siblings. Jill wants to gift $15,000 to Jack's daughter. She and Jack can join in that gift to take
advantage of gift splitting.
Chapter 15—Preserving Your Estate
a.
True
b.
False
68. If a grantor transfers a life insurance policy to an irrevocable trust within three years before the grantor's death, the
policy will not be included in the estate.
a.
True
b.
False
69. The top federal gift and estate tax rate for 2015 is expected to be 40 percent.
a.
True
b.
False
70. The gift tax law allows a person to give gifts up to $13,000 tax free.
a.
True
b.
False
