Deck 15: Retirement and Estate Planning - Estate Planning

Question 1

Probate is the legal process that ensures orderly distribution of assets and guardians of children are appointed as the testator wished.

Answer 1

True

Question 2

English form wills must be dated,signed,and witnessed and are the most common in Canada.

Answer 2

True

Question 3

Two key goals of estate planning are to ensure that your assets pass to your chosen beneficiaries and to minimize taxes to be paid.

Answer 3

True

Question 4

If an administrator is appointed to settle an estate,this can cause delays,additional expenses and decisions the testator would not have wished.

Question 5

The residue of an estate is the amount of assets you own before taxes.

Question 6

In Canada the average tax paid at death is high due to deemed dispositions and probate fees.

Question 7

If you are involved in a common-law relationship,it is the same as being married regarding preferential share entitlement.

Question 8

To create a will,a person must be of legal age,be mentally competent,and not be subject to undue influence or threats by others.

Question 9

A preferential share claimed by a spouse may limit the amount granted to other beneficiaries.

Question 10

There will be no tax on capital property held jointly with a surviving spouse.

Question 11

On death the executor must sell all assets,thereby triggering taxes.

Question 12

The document that describes funeral preferences and indicates where key financial records are kept is called the letter of last rites.

Question 13

Minor changes to a will can be made with a simple document called a codicil.

Question 14

If you die intestate,your surviving spouse,or if you do not have a spouse,then your child,if over the age of 19,will become executor of your estate.

Question 15

Even a parent without significant net worth needs a will to appoint a guardian for their children.

Question 16

As long as a holograph is in the handwriting of the testator,it is valid in Canada.

Question 17

If a person dies without a valid will,the court will appoint an administrator,who is an expert in estate settlement and tax minimization.

Question 18

If a spouse dies intestate all their assets will transfer to the surviving spouse.

Question 19

With samples of valid wills being available on websites and in bookstores,it is not recommended that a person incur the additional expense of hiring a lawyer to write a will.

Question 20

If you get married,your will is cancelled in some provinces but not in others.

Question 21

RRSPs can be rolled over to certain beneficiaries without being subject to tax.

Question 22

An executor may

A)account for newborn children if not included as beneficiaries.
B)adjust the preferential share.
C)be a beneficiary of the will.
D)determine the value for the assets.

Question 23

In many cases,the executor and the trustee is the same individual.

Question 24

A trust involves the transfer of assets to a third party who manages these assets for a beneficiary.

Question 25

Enduring powers of attorney must only be granted to people of utmost trustworthiness because of their power.

Question 26

A handwritten will is called a notarial will.

Question 27

If you die without a will,the court will appoint

A)a grantor.
B)an attorney.
C)an administrator.
D)a settlor.

Question 28

A holograph will

A)is the most common will in Quebec.
B)remains in effect after a new marriage.
C)does not require the signatures of witnesses.
D)must be witnessed by a notary or lawyer.

Question 29

There may be a need to distribute half of the estate to the spouse and the other half to any other beneficiaries due to

A)intestacy law.
B)the wills variation Act.
C)the preferential marital share.
D)consanguinity.

Question 30

In choosing a guardian for your children,you should

A)ensure he or she is also prepared to be the custodian.
B)be sure to include this in the last letter of instruction.
C)ensure that the person you select is willing to serve in this capacity.
D)authorize this in a power of attorney.

Question 31

Granting a durable power of attorney gives the authorized individual power to make decisions about your medical treatment,rather than leaving it to the health care professionals.

Question 32

A living will is a health care directive for individuals to specify their preferences if they become mentally or physically disabled.

Question 33

If a person dies and two wills are discovered in the safety deposit box,

A)there is a complicated legal process to determine the valid will.
B)the will with the most recent date will be the valid will.
C)the earliest dated will is valid.
D)the courts will determine the valid will.

Question 34

A testamentary trust comes into force upon death.

Question 35

The primary purpose of a preferential share is to

A)give each former spouse a share of the assets in the case of multiple marriages.
B)provide for the appropriate distribution of matrimonial property.
C)ensure dependents are looked after.
D)divide assets fairly between the spouse and progeny.

Question 36

A living will is a simple legal document in which individuals specify their preferences if they become mentally or physically disabled.

Question 37

Which of the following is necessary for an English form will to be valid?

A)It must be written in the testator's handwriting.
B)It must be dated within ten years of death.
C)It must be signed by the testator and two witnesses.
D)The person writing the will must be over age 21 at the time the will is written.

Question 38

Estate planning commonly involves trusts,gifts,and charitable contributions for the purpose of avoiding taxes.

Question 39

Which of the following is not a good reason to have a will?

A)To distribute your assets as you wish
B)To appoint an attorney to make specific health care decisions for you
C)To reduce the costs being imposed on the estate
D)To appoint a legal guardian for children

Question 40

The first clause in a will

A)appoints the executor.
B)identifies the beneficiaries.
C)appoints the administrator.
D)identifies the deceased.

Question 41

The purpose of probate is to ensure

A)the will is valid to and for orderly distribution of assets.
B)payment of liabilities are prioritized accurately.
C)provinces collect the requisite probate fees.
D)fair jurisprudence of all financial matters.

Question 42

You may want to execute a codicil to your existing will

A)to add alternate executors.
B)if you remarry.
C)if you move to a different province.
D)if you give birth to a child.

Question 43

You are recently divorced and have relocated to another province,you should

A)prepare a new letter of last instruction.
B)prepare a codicil.
C)prepare a new will.
D)have your existing will notarized in the new province.

Question 44

If you wish to be cremated when you die,this request should be included in a

A)durable power of attorney.
B)letter of last instruction.
C)codicil.
D)letter of last rites.

Question 45

The value of the estate is calculated using

A)cost.
B)fair market value.
C)cost plus inflation.
D)the consumer price index.

Question 46

A type of trust that is created by a will is called a(n)

A)alter ego trust.
B)testamentary trust.
C)beneficial trust.
D)inter vivos trust.

Question 47

When a testator dies in December,the tax return must be filed

A)three months after the estate is settled.
B)by December 31st in the year after death.
C)by June 30th of the following year.
D)by April 30th of the following year.

Question 48

An executor may be able to file more than one tax return for the deceased

A)when the first return was not filed on time.
B)when a business was sold just prior to death.
C)if the estate received a life insurance policy.
D)when rights or things are still owed to the deceased at death.

Question 49

Inter vivos trusts

A)are formed to protect assets for a dependent child.
B)may not be used for fixed assets such as a cottage.
C)are continually and actively managed by the settlor.
D)pay taxes on earnings at the highest marginal rate.

Question 50

Which kind of trust allows assets to transfer into it on a tax deferred basis?

A)Alter ego trust
B)Testamentary trust
C)Charitable trust
D)Inter vivos trust

Question 51

The person who establishes and funds a trust is the

A)trustee.
B)administrator.
C)settlor.
D)testator.

Question 52

Inter vivos trusts usually

A)form part of your assets upon death and need to be probated.
B)are challenged through the court system when made public at death.
C)result in arguments about who owns the assets upon death.
D)distribute all income to beneficiaries annually to avoid high tax rates.

Question 53

If no named executor is able to perform the appointed tasks,

A)the surviving spouse would become the executor.
B)the courts would appoint an administrator.
C)the next of kin becomes the executor.
D)the will becomes invalid.

Question 54

Which of the following is the start of the probate process?

A)Payment of claims against the estate
B)The validation of the will
C)Determination of legal heirs
D)Filing the will and probate form with the court

Question 55

If your spouse has predeceased you,RRSPs

A)can pass to registered charities with no tax liability.
B)are fully taxable.
C)can pass to a dependent child with no tax liability.
D)are taxed as capital gains.

Question 56

In the year of death,contributions to registered charitable organizations through your will

A)can be made to a family member.
B)are restricted to 75 percent of gross income.
C)can be 100 percent of net income and that of the preceding year.
D)is capped at $75 000.

Question 57

Which of the following is True regarding the evaluation of a deceased's estate for probate purposes?

A)All capital assets are listed and valued as of the date of death.
B)All registered assets must be sold and deregistered.
C)Taxation is based on the total value of all assets probated.
D)The value of your home is never included in probate.

Question 58

A document that specifies changes to an existing will is

A)a letter of instruction.
B)a codicil.
C)an amendment.
D)an addendum.

Question 59

A legal document in which individuals specify their preferences in the event that they become mentally or physically disabled is called a(n)

A)enduring power of attorney.
B)living will.
C)durable power of attorney.
D)letter of wishes.

Question 60

When considering holding assets as joint ownership with rights of survivorship for estate planning purposes,it is important to understand

A)that capital gains taxes will be deferred on this transaction until the survivor passes.
B)how the spousal roll-over rules will impact capital gains taxation.
C)the implications of giving up your decision making power over the asset.
D)that naming a child as a joint owner of your principal residence will trigger capital gains taxes.

Question 61

If Mary is not sure her primary beneficiary will survive her,she should

A)name a contingent beneficiary.
B)name joint beneficiaries.
C)change her beneficiary.
D)name her estate as beneficiary.

Question 62

What is the primary problem with dying intestate?

A)An administrator will be appointed to distribute the estate according to law.
B)Any children will become wards of the state.
C)Medical personnel will be responsible for decisions about your care.
D)Your estate will flow to the government.

Question 63

To create a valid will,an individual must be

A)financially viable.
B)mentally competent.
C)physically competent.
D)visually competent.

Question 64

A power of attorney for health care can give someone you designate the power to make which of the following decisions?

A)Pay your bills while you are in the hospital
B)Decide on funeral arrangements
C)Make decisions for you about specific treatment options
D)Distribute assets while you are in a nursing home

Question 65

Discuss the characteristics and expertise you would look for in the person you want to appoint as your executor or attorney.

Question 66

The initial part of the will is

A)disposition of estate.
B)appointment of trustee.
C)testator identification.
D)appointment of guardian.

Question 67

A limited power of attorney for finances for a specific time while you are travelling outside the country can give someone you designate the power to make which of the following decisions?

A)Sell stock in your portfolio
B)Make a new power of attorney for you
C)Decide which assets should be sold if you pass away before returning
D)Decide which care home you can afford if you become incapacitated during the trip

Question 68

If John is going to have his first child,which of the following should he do for his estate planning?

A)Add a codicil to his will
B)Review his will
C)Update his will
D)Review his power of attorney

Question 69

Explain the differences between and the importance of using continuing and non-continuing forms of a power of attorney in estate planning.

Question 70

A notarial will is a formal type of will that is

A)most commonly used in Quebec.
B)the most common form across Canada.
C)not valid in a number of provinces.
D)written fully in the handwriting of the testator.

Question 71

A legal document granting a person the power to make specific health care decisions for you in the event that you become incapacitated is called a(n)

A)enduring power of attorney for health care.
B)general health care power of attorney.
C)durable power of attorney for health care.
D)health care directive.

Question 72

A legal document granting a person the power to make specific decisions for you in the event that you become incapacitated is called a(n)

A)durable power of attorney.
B)enduring power of attorney.
C)living will.
D)general power of attorney.

Question 73

For which of the following events is a review of your will most essential?

A)Moving to a new province
B)Changing to a new job
C)Getting engaged
D)Getting a large salary bonus

Question 74

Indicate five personal situations where having a will and estate plan is most essential and two where having a will would not be as important.

Question 75

A non-continuing power of attorney with a specified task

A)becomes enforceable as a will if the grantor dies.
B)becomes transferable if the attorney is incapacitated.
C)expires when the task or event has been completed.
D)has all-encompassing power if the grantor becomes incapacitated.

Question 76

A trustee is an individual or organization that is responsible for

A)carrying out the administration involved in settling an estate.
B)selling the assets to one or more of the beneficiaries of a will.
C)distributing the assets to one or more of the beneficiaries of a will.
D)managing the assets held in trust while the estate is settled.

Question 77

Name and explain the different features of three types of trusts and give circumstance where they would be applicable.

Question 78

An English form will requires the signatures of the

A)lawyer and two witnesses.
B)executor and one witness.
C)testator and two witnesses.
D)testator and two beneficiaries.

Question 79

A general power of attorney

A)enables the attorney to make a new will for you.
B)terminates automatically when assets run out.
C)does not provide immediate authority until someone becomes ill.
D)terminates if the attorney dies.