Deck 36: Estate Planning: Wills, Estates, and Trusts

Question 1

A(n) _____ is a document that amends and updates a will.

A) bequest
B) devise
C) codicil
D) abatement
E) living will

Answer 1

C

Question 2

On termination of a revocable trust, the legal title to the trust assets returns to the settlor.

Answer 2

True

Question 3

A testamentary trust is usually irrevocable.

Answer 3

False

Question 4

A system of distribution in which all living descendants share equally, regardless of generation, is said to be a distribution per capita.

Question 5

Unlike a contract or a deed, a will can be changed as long as the person making the will lives.

Question 6

Floyd died without making a will. He left a wife and two children, one of whom had predeceased him. Under a typical interstate succession law, Floyd's estate will be divided equally between his wife and the living child.

Question 7

Estates and trusts are taxable entities under the federal income tax statutes.

Question 8

The trustee is the person, institution for whose benefit the trust has been created.

Question 9

A will can be written in pencil or pen and on any kind of paper.

Question 10

Jacob's will stated that $100,000 each would be given to his wife, Melisa, and two children, Tim and Ben. But upon his death, it was found that his estate was worth only $240,750. Hence, the bequests to his wife and two children are said to have _____, and each would only get $80,250.

A) devised
B) abated
C) exempted
D) converted
E) executed

Question 11

A specialized court that supervises the process by which a deceased's estate is managed is known as a(n) _____.

A) circuit court
B) ecclesiastical court
C) private court
D) appellate court
E) probate court

Question 12

Frances left Jared her 46-inch LCD television in her will. However, when she died, she had just one 32-inch television. According to the rule of ademption, Jared will receive the 32-inch television.

Question 13

Living wills are an exception to the rule that wills are effective only upon the death of the testator.

Question 14

If a person dies intestate, the property escheats to the state.

Question 15

Aston, the owner of a large mansion in Chicago, died without a will. He did not have any collateral heirs, surviving kin or any known heirs. Hence, his property would _____ to the state.

A) convert
B) abate
C) adempt
D) escheat
E) escrow

Question 16

_____ of a gift in a will means that the intended legatee forfeits the object because it no longer exists.

A) Abatement
B) Intestacy
C) Ademption
D) Conversion
E) Exemption

Question 17

A _____ will is one that is declared orally in front of witnesses.

A) nuncupative
B) holographic
C) conditional
D) reciprocal
E) viral

Question 18

The inheritance tax rate depends on the relationship to the decedent; that is, the closer the relationship, the higher the tax rate.

Question 19

According to the Uniform Probate Code (UPC), a will can still be valid even if one of the two witnesses is a beneficiary under the will.

Question 20

According to the Uniform Principal and Income Act, any expenses incurred in making any permanent improvements to the property specified in the trust are chargeable to income.

Question 21

Daniel created a trust intending to assist his children with their college expenses. It can be said that Daniel is a(n) _____.

A) settlor
B) executrix
C) legatee
D) beneficiary
E) executor

Question 22

Ashton and Jennifer, husband and wife, created a charitable remainder trust through their will, to provide income to their children for 20 years after the last of the two parents died. This trust is known as a(n) _____ trust.

A) spendthrift
B) Totten
C) nuncupative
D) testamentary
E) Clifford

Question 23

To carry on the administration of an estate, a particular person must be responsible for locating the estate property and carrying out the decedent's instructions. If named in the will, this person is called a(n) _____ and the Uniform Probate Code (UPC) refers to the person as the _____.

A) holder; executor
B) testator; legatee
C) settlor; administrator
D) legatee; grantor
E) executor; personal representative

Question 24

The _____ rule under the Uniform Principal and Income Act (UPIA) states that the trust should be taxed on the balance left over after the trust has completed all payouts to beneficiaries.

A) caveat emptor
B) condominium
C) conduit
D) resulting trust
E) Clifford

Question 25

A(n) _____ trust is a type of trust established when the settlor believes that the beneficiary is not to be trusted with the income or assets of the trust.

A) blind
B) Totten
C) Clifford
D) express
E) spendthrift

Question 26

What is meant by estate planning? What are its objectives and tools?

Question 27

A system of distribution in which all living descendants share equally, regardless of generation, is said to be a distribution _____.

A) per capita
B) per stripes
C) escheat
D) ademption
E) escrow

Question 28

What are the various provisions in a typical written will?

Question 29

The _____ trust is a tentative trust created when someone deposits funds in a bank as trustee for another person as beneficiary.

A) blind
B) Totten
C) Clifford
D) express
E) spendthrift

Question 30

Which of the following would be considered an ordinary receipt under the Uniform Principal and Income Act (UPIA)?

A) Stock dividends
B) Rent payments received
C) Revenue from sale of trust assets
D) Proceeds from insurance on assets
E) All income accrued at the testator's death

Question 31

In the case of formation and management of a trust, the person receiving the power of appointment is known as the:

A) executrix.
B) legatee.
C) donee.
D) leasee.
E) testatrix.