Deck 15: Preserving Your Estate

Question 1

Estate planning is one of the key elements of personal financial planning.

Answer 1

True

Question 2

Your gross estate is composed only of nonprobate property.

Answer 2

False

Question 3

Probate property includes only real property.

Answer 3

False

Question 4

Insufficient capital can cause problems paying estate taxes.

Question 5

Property held in different states does not complicate the estate planning process.

Question 6

Minors can handle large sums of money and property.

Question 7

Inflation is a common reason for estates to break up.

Question 8

Estate planning usually occurs during the last ten years of a person's life.

Question 9

Funeral expenses are examples of second-level death-related costs.

Question 10

Disability is a common reason for estates to break up.

Question 11

The main objective of estate planning is to save attorney's fees.

Question 12

Successful estate planning requires knowledge of wills,trusts,and taxes.

Question 13

A potential estate planning problem is improper distribution of assets.

Question 14

More damage is done to estates by doing nothing than by doing the wrong thing.

Question 15

If there is no estate plan in place,state and federal laws control the disposition of assets.

Question 16

Custodial accounts are used to protect the property of minor children.

Question 17

Your gross estate is all property subject to federal tax at your death.

Question 18

People planning means providing sustenance and resources for family members.

Question 19

The two main areas of estate planning are asset planning and probate planning.

Question 20

Liquidity is important in an estate to pay for death costs and possible taxes.

Question 21

A will may be invalid if the testator was under undue influence of another person.

Question 22

Dying intestate means dying with a valid will.

Question 23

If a person without relatives dies with a valid will,his or her property will go to the state.

Question 24

The appointment clause in a will determines the county that will have legal jurisdiction.

Question 25

The appointment clause affirms that the will in question was really made out by the deceased.

Question 26

Intestacy results from dying without a valid will.

Question 27

The prolonged and expensive disability of a family wage earner is often called a working death.

Question 28

In most states,divorce creates an automatic revocation or modification of a will.

Question 29

The testator of a will always receives property from the will.

Question 30

Only the wealthy need an attorney to prepare their wills.

Question 31

Typically,a will must be signed by two witnesses to be valid.

Question 32

A will is required by state law.

Question 33

If you die intestate,federal law dictates the disposition of your estate.

Question 34

Gathering data on all aspects of the family is an important estate planning function.

Question 35

If there is no will,a judge will decide who gets your children.

Question 36

Updating an estate plan is a critical part of the estate planning process.

Question 37

The intestate process is federally mandated,and is similar from state to state.

Question 38

The majority of Americans have valid wills.

Question 39

A codicil is a simple and convenient legal means of modifying a will.

Question 40

An estate plan is good only as long as it fits the needs,desires,and circumstances of the parties involved.

Question 41

The recipient of the gift will pay any gift tax that is due.

Question 42

A trust is a means of transferring property.

Question 43

Trustees receive the benefits from a trust.

Question 44

Proof of mental capacity lies on the person contesting a will,not on the individual writing a will.

Question 45

If a gift is so large that taxes are due,the money used to pay the taxes is removed from the estate.

Question 46

All living trusts are revocable.

Question 47

It is best to name an older person as the trustee.

Question 48

A testamentary trust is established in a will.

Question 49

Bequests to close relatives who die before the testator will go to the relative's heirs unless the will includes other directions.

Question 50

A letter of last instructions is a legal document.

Question 51

The best choice for a trustee is a family member.

Question 52

Trusts facilitate the transfer of property and the income from that property to another party.

Question 53

One should make copies of his will and store them in different places.

Question 54

Death will erase any debts existing at that time.

Question 55

Mental capacity requires an individual to be at least 21.

Question 56

Any future appreciation of gifted property is excluded from the estate.

Question 57

The revocation statement in a will directs the estate to make certain payments of expenses.

Question 58

A will is revoked if a second legitimate will is created.

Question 59

A will should be destroyed after a codicil is written.

Question 60

Gift giving can reduce estate tax liability.

Question 61

____ would represent a second-level death-related cost.

A)Unpaid bills
B)Health-related bills
C)Federal estate taxes
D)Inflation
E)None of these

Question 62

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.

Question 63

The adjusted gross estate is calculated by subtracting any allowable marital deduction or charitable deduction from the gross estate.

Question 64

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.

Question 65

The top federal gift and estate tax rate for 2015 is expected to be 40 percent.

Question 66

The federal estate tax applies to certain property transfers made during a person's lifetime.

Question 67

The goal of estate planning is

A)to accumulate.
B)to preserve.
C)to distribute.
D)all of these.
E)none of these.

Question 68

If a life insurance owner-insured gives away the policy within five years of his death,the proceeds will be included in his estate.

Question 69

The taxable estate is less than the adjusted gross estate.

Question 70

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.

Question 71

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.

Question 72

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

Question 73

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

Question 74

Maxine's estate is worth $600,000.It will not be subject to federal estate taxes.

Question 75

To calculate the estate tax base,any adjusted taxable gifts are added to the taxable estate.

Question 76

The federal estate tax must be paid within six months of the decedent's death.

Question 77

The gift tax law allows a person to give gifts up to $13,000 tax free.

Question 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

Question 79

The estate exclusion amount increased to $5,340,000 in 2015.

Question 80

Estate planning is designed to

A)administer and distribute assets.
B)minimize taxes.
C)increase the size of the estate.
D)all of these.
E)none of these.