Chapter 19 – Estate Planning
1. (p. 635) Many people do little, if any, estate planning.
2. (p. 635) Estate planning is a definite plan for the administration and disposition of one’s
property during one’s lifetime and at one’s death.
3. (p. 635) Estate planning is not an essential part of retirement planning.
4. (p. 635) A large percentage of people do little or nothing to provide for those who will survive
them.
Chapter 19 – Estate Planning
5. (p. 636) If you never married, you don’t need to organize your personal and financial
documents.
6. (p. 635) Estate planning is useful only to rich and elderly people.
7. (p. 635) Estate planning is an integral part of financial planning.
8. (p. 635) Most people cannot afford the expense of setting up trusts.
Chapter 19 – Estate Planning
9. (p. 635) Estate planning is a subject most people would rather avoid: death—your own or that
of your spouse.
10. (p. 635) An estate plan is usually implemented by a will and one or more trust agreements.
11. (p. 637) Millions of nontraditional households have unique estate planning problems.
12. (p. 637) Unmarried couples face formidable retirement and estate planning challenges.
Chapter 19 – Estate Planning
13. (p. 638) Last-minute “death-bed” estate planning may fail to carry out your wishes.
14. (p. 639) Every adult should have a written will.
15. (p. 639) If you die without a valid will, you die intestate.
16. (p. 639) A will is a legal declaration of a person’s mind as to the disposition of his or her
property after death.
Chapter 19 – Estate Planning
17. (p. 639) If you die intestate, the state’s law of descent and distribution becomes your will.
18. (p. 641) It is unnecessary to modify your will when you divorce or remarry.
19. (p. 641) If you marry after you have made a will, the will is revoked automatically unless
certain conditions are met.
20. (p. 641) If you marry after you have made a will, you are better off drawing a new will to fit
your new circumstances.
Chapter 19 – Estate Planning
21. (p. 641) The cost of preparing a will varies from place to place.
22. (p. 641) Generally, the cost of writing a will is more than that for writing a living trust.
23. (p. 641) Probate is a legal procedure of proving a valid or invalid will.
24. (p. 641) You should avoid probate because it is expensive, lengthy, and public.
Chapter 19 – Estate Planning
25. (p. 641) One of the advantages of a living trust is that property held in it avoids probate at
your death.
26. (p. 642) Under the traditional marital share will, half of your estate is taxed at your death and
half at your spouse’s death.
27. (p. 642) A simple will, or I love you will, leaves everything to the spouse.
28. (p. 642) A simple will creates lower overall taxation for all individuals.
Chapter 19 – Estate Planning
29. (p. 643) A statutory will is one type of formal will.
30. (p. 644) Your executor can be a family member, a friend, an attorney, an accountant, or the
trust department of a bank.
31. (p. 645) A guardian is a person or an institution that holds property for the benefit of
someone else.
32. (p. 646) Making any changes on the face of your will can invalidate it.
Chapter 19 – Estate Planning
33. (p. 646) A codicil is a document that explains, adds, or deletes provisions in your existing
will.
34. (p. 646) A prenuptial agreement is a documentary agreement between spouses after
marriage.
35. (p. 642) A simple will is sufficient for most smaller estates.
36. (p. 642) The adjusted gross estate is equal to the gross estate minus debts and costs.
Chapter 19 – Estate Planning
37. (p. 642) A will in which everything passes to the spouse except the exemption amount is
called the exemption trust will.
38. (p. 641) A living trust does not avoid probate but it is less expensive, quicker, and private.
39. (p. 642) The main advantage of the exemption trust will is that it eliminates future taxation of
the exemption amount and any growth in it.
40. (p. 642) The stated dollar amount will allow you to pass on to your spouse any amount that
satisfies your family objectives.
Chapter 19 – Estate Planning
41. (p. 643) A formal will is usually prepared with an attorney’s assistance.
42. (p. 643) A formal will may be either typed or on a preprinted form.
43. (p. 643) A beneficiary is a person who has been named to receive property.
44. (p. 643) Joint ownership is a good substitute for a will.
45. (p. 644) The state law sets the fees for executors, whether professionals or friends.
Chapter 19 – Estate Planning
46. (p. 646) If only a few changes are needed in your will, adding a codicil may be the best
choice.
47. (p. 646) A living will provides for your wishes to be followed if you become so physically or
mentally disabled that you are unable to act on your own behalf.
48. (p. 646) A living will is a good substitute for a traditional will.
49. (p. 646) Most states do not recognize living wills.
Chapter 19 – Estate Planning
50. (p. 648) An ethical will is a way to pass on your values and beliefs to your heirs.
51. (p. 648) A power of attorney is a legal document authorizing someone to act on your behalf.
52. (p. 648) You can assign a power of attorney to anyone you choose.
53. (p. 648) A letter of last instruction can provide your heirs with important information.
Chapter 19 – Estate Planning
54. (p. 649) In a revocable trust, you forfeit the right to end the trust or change its terms during
your lifetime.
55. (p. 649) A trust is a legal arrangement through which a trustee holds your assets for your
benefit or that of your beneficiaries.
56. (p. 650) A living or inter vivos trust is a property management arrangement that you establish
while you are alive.
57. (p. 649) A credit-shelter trust is perhaps the most common estate-planning trust.
Chapter 19 – Estate Planning
58. (p. 650) A disclaimer trust is designed for the couple who don’t yet have enough assets to
need a credit-shelter trust.
59. (p. 654) With a marital-deduction trust you can leave your spouse any money that doesn’t go
into a credit-shelter trust.
60. (p. 654) Perhaps the most popular form of marital trust is the Q-TIP trust.
61. (p. 649) A credit-shelter trust is known as a bypass trust, a “residuary” trust, an A/B trust, or
a family trust.
Chapter 19 – Estate Planning
62. (p. 654) A qualified personal residence trust, or QPRT, lets you get your home or vacation
home out of your estate.
63. (p. 654) A generation-skipping trust allows people to directly leave a substantial amount of
money to their grandchildren.
64. (p. 652) A testamentary trust is a trust established by your will that becomes effective upon
your death.
65. (p. 657) An estate tax is a federal tax levied on the right of a deceased person to transmit his
or her property and life insurance at death.
Chapter 19 – Estate Planning
66. (p. 658) An inheritance tax is levied on the right of an heir to receive all or part of the estate
and life insurance proceeds of a deceased person.
67. (p. 635) Which one of the following statements is true about estate planning?
68. (p. 635) Estate planning involves which of the following?
Chapter 19 – Estate Planning
69. (p. 636) If you are married, your estate planning involves:
70. (p. 635) Which one of the following statements is correct?
71. (p. 635) Estate planning has two parts. The first part consists of:
Chapter 19 – Estate Planning
72. (p. 635) Estate planning has two parts. The second part of estate planning consists of:
73. (p. 636) In estate planning, if you are married:
74. (p. 635) Which of the following is a part of estate planning?
Chapter 19 – Estate Planning
75. (p. 637) Which of the following is true if you are an unmarried couple?
76. (p. 639) Which of the following is an important document needed for estate planning?
77. (p. 639) Gerry Legere has died without writing a will. What is the legal term for this?