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Chapter 15—Preserving Your Estate
KEYWORDS:
Bloom's: Remembering
71. The adjusted gross estate is calculated by subtracting any allowable marital deduction or charitable deduction from the
gross estate.
a.
True
b.
False
72. The federal estate tax must be paid within six months of the decedent's death.
a.
True
b.
False
73. To calculate the estate tax base, any adjusted taxable gifts are added to the taxable estate.
a.
True
b.
False
74. Estate planning is closely related to
a.
retirement and investment planning.
b.
tax and retirement planning.
c.
tax and investment planning.
d.
retirement and insurance planning.
e.
insurance and investment planning.
Chapter 15—Preserving Your Estate
75. The goal of estate planning is
a.
to accumulate.
b.
to preserve.
c.
to distribute.
d.
all of these.
e.
none of these.
76. This situation calls especially for an estate plan based on the people planning perspective.
a.
Working couple with disabled child
b.
Married man with no dependents
c.
Single person, no dependents, some property
d.
Single person, no property
e.
Mother and daughter, independent, ages 65 and 43, share housing
77. Estate planning is designed to
a.
administer and distribute assets.
b.
minimize taxes.
c.
increase the size of the estate.
d.
all of these.
Chapter 15—Preserving Your Estate
e.
none of these.
78. ____ would be a first-level death-related cost.
a.
Funeral expenses
b.
Federal estate taxes
c.
Probate expenses
d.
Inheritance taxes
e.
Administrative costs
79. Why does an estate "break up"?
a.
Death-related costs
b.
Inflation
c.
Improper use of vehicles of transfer
d.
Lack of liquidity
e.
All of these
80. ____ would represent a second-level death-related cost.
a.
Unpaid bills
Chapter 15—Preserving Your Estate
b.
Health-related bills
c.
Federal estate taxes
d.
Inflation
e.
None of these
81. The first step in the estate planning process is to
a.
estimate transfer costs.
b.
list all assets and determine the ownership and value of your estate.
c.
gather comprehensive and accurate data.
d.
assess your family situation and set estate planning goals.
e.
designate beneficiaries of your estate's assets.
82. The probate estate
a.
consists of real property.
b.
consists of personal property.
c.
is regulated by intestate laws if you have no valid will.
d.
all of these.
e.
none of these.
Chapter 15—Preserving Your Estate
83. You should review your estate plan every _____ years.
a.
1 to 2
b.
2 to 3
c.
3 to 5
d.
5 to 9
e.
10
84. A will is used to
a.
name a personal representative to guide the distribution of the estate.
b.
name a guardian for persons and property.
c.
specify the distribution of tax burdens to beneficiaries.
d.
all of these.
e.
none of these.
85. To be "of sound mind" means that you
a.
understand your relationship with persons for whom you would normally provide.
b.
are able to decide how to distribute your property.
c.
know what a will is and are aware that you are making and signing one.
d.
understand what you own.
e.
can do all of these.
Chapter 15—Preserving Your Estate
86. An estate plan would be least likely to need revision when
a.
a child was born.
b.
people moved from one state to another.
c.
a son graduated from college.
d.
a spouse became disabled.
e.
the tax laws changed.
87. One of the aspects of disposition of property consists of
a.
distributing residual assets after specific gifts have been made.
b.
allocating the burden of taxes among the beneficiaries.
c.
determining which county will have legal jurisdiction.
d.
naming the executors of the estate.
e.
none of these.
88. A will is a legal document outlining the plan for
a.
your funeral.
b.
disposition of your assets.
c.
payment of taxes.
d.
management of your assets.
e.
survivors' goals.
Chapter 15—Preserving Your Estate
89. Which of the following is not a section of the last will and testament?
a.
Direction of payments
b.
Appointment clause
c.
Simultaneous death clause
d.
Contest and dispose clause
e.
Execution and attestation clause
90. If you die without a will, you are said to have died
a.
improperly.
b.
without heirs.
c.
without estate.
d.
intestate.
e.
in probate.
91. In the absence of a valid will, the heir most generally favored would be the
a.
spouse.
b.
children.
c.
parents.
d.
grandchildren.
e.
All of these are treated as equals.
Chapter 15—Preserving Your Estate
92. You have a spouse, two children, 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.
children.
c.
spouse.
d.
father.
e.
spouse and children.
93. When you die intestate, you have given the court or state the privilege of determining
a.
tax deadlines.
b.
burial arrangements.
c.
guardians of dependents.
d.
beneficiary needs.
e.
divisions of estate to charities.
94. Which of the following are requirements of a valid will?
a.
Mental capacity
Chapter 15—Preserving Your Estate
b.
Freedom of choice
c.
Proper execution
d.
All of these
e.
None of these
95. The person or guardian you choose for your children should
a.
be willing to relocate to your home state.
b.
have at least $100,000 in assets.
c.
be willing to take care of your children according to your wishes.
d.
be a partial beneficiary of your estate.
e.
none of these.
96. The person who writes a will is called the
a.
testator.
b.
attorney.
c.
probater.
d.
estate planner.
e.
grantor.
Chapter 15—Preserving Your Estate
97. When writing a will, you should seek the professional services of
a.
tax accountants.
b.
attorneys.
c.
executors.
d.
intestate administrators.
e.
trustees.
98. Requirements for a valid will do not include which of the following?
a.
The testator must be of sound mind.
b.
The testator must not be unduly influenced.
c.
The will must be properly executed.
d.
There must be no fraud in the execution of the will.
e.
The will must be drawn up by an attorney.
99. Writing a valid will does not require
a.
full knowledge of the act.
b.
clear mental capacity.
c.
no undue influence on the testator.
d.
mentally competent heirs.
e.
proper execution.
100. A testator can revoke a will in which of the following ways?
a.
Making a later will that revokes prior wills
b.
Making a codicil that revokes prior wills
c.
Burning the will
d.
Making a later will that is inconsistent with a prior will
e.
All of these
101. A letter of last instruction might provide directions for
a.
location of the will.
b.
legal and accounting services.
c.
explanation of the actions taken in the will.
d.
suggestions on how to divide personal property.
e.
all of these.
102. A codicil is a(n)
a.
person who makes a will.
b.
court-named guardian.
c.
survivors' response to a will.
d.
revision to a will.
e.
executor's revision of a will.
Chapter 15—Preserving Your Estate
103. A letter of last instructions could include which of the following?
a.
Revisions to a will
b.
Establishment of trusts
c.
Naming of guardians
d.
Distribution of assets
e.
Funeral and burial wishes
104. Your will would appoint a(n) ____ to carry out the terms of the will.
a.
family attorney
b.
executor
c.
tax accountant
d.
life insurance beneficiary
e.
administrator
105. When selecting a trustee, you should consider her
a.
investment and trust management skills.
b.
business knowledge and judgment.
c.
relationship to the family.
d.
a and b
e.
b and c
Chapter 15—Preserving Your Estate
106. The decedent's personal representative is called a(n)
a.
guardian.
b.
administrator.
c.
attorney.
d.
testator.
e.
successor.
107. A joint tenancy with right of survivorship may consist of
a.
a parent and child.
b.
a husband and wife.
c.
a brother and sister.
d.
none of these.
e.
any of these.
108. A form of joint ownership that may exist only between husband and wife is
a.
joint tenancy.
b.
joint tenancy with right of survivorship.
Chapter 15—Preserving Your Estate
c.
joint tenancy without right of survivorship.
d.
tenancy in common.
e.
tenancy by the entirety.
109. Which of the following forms of ownership does not have rights of survivorship?
a.
Community property
b.
Joint tenancy
c.
Tenants by the entirety
d.
Tenancy in common
e.
Both a and d
110. The living will states
a.
distribution of assets while alive.
b.
duration of medical treatments.
c.
agent may make health care decisions if you are unable to do so.
d.
while alive you and only you may make changes to your will.
e.
all of these.
Chapter 15—Preserving Your Estate
111. In most states, you must be at least ____ to make a will.
a.
15
b.
16
c.
18
d.
21
e.
25
112. Tenancy of the entirety consists of
a.
husband and wife only.
b.
immediate family.
c.
immediate and extended family.
d.
all of these.
e.
none of these.
113. A trust that provides continuity and asset management and allows assets to bypass probate, but which provides no
income or estate tax advantages, is a(n) ____ trust.
a.
revocable living
b.
irrevocable living
c.
testamentary
d.
charitable lead
e.
credit shelter
Chapter 15—Preserving Your Estate
114. A "trustee" is also called
a.
the settlor.
b.
the trustor.
c.
the creator.
d.
all of these.
e.
none of these.
115. Which of the following qualities is essential in a trustee?
a.
Impartial family member
b.
Possess sound business knowledge and judgment
c.
Partial beneficiary
d.
All of these
e.
None of these
116. Which of the following is not a type of trust?
a.
Credit shelter trust
b.
Qualified terminable interest property trust
c.
Crummey trust
d.
Charitable remainder trust
e.
Credible property sharing trust
Chapter 15—Preserving Your Estate
117. Which of the following is a reason for making lifetime gifts?
a.
Appreciation in value
b.
Credit limit
c.
Impact of marital deduction
d.
Gift tax annual exclusion
e.
All of these
118. A trust designed to provide liquidity for an estate without increasing the size of the estate is a(n) ____ trust.
a.
revocable living
b.
irrevocable life insurance
c.
testamentary
d.
charitable lead
e.
credit shelter
119. The unified rate schedule applies to federal ____ taxes.
a.
inheritance and gift
b.
gift and income
c.
gift and estate
d.
income and estate
e.
estate and inheritance
