Deck 15: Preserving Your Estate

Question 1

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

Answer 1

True

Question 2

Using a trust can help shield an estate from using improper vehicles of transfer.

Answer 2

True

Question 3

Knowing where parents keep important documents is a step for estate planning process.

Answer 3

False

Question 4

Disability is a common reason for estates to break up.

Question 5

People planning means providing sustenance and resources for family members.

Question 6

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

Question 7

Life insurance comprises a large portion of most individuals' probate estates.

Question 8

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

Question 9

A potential estate planning problem is improper disposition of assets.

Question 10

Inflation is a common reason for estates to break up.

Question 11

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

Question 12

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

Question 13

The gross estate includes all the property subject to federal estate tax at a person's death.

Question 14

Estate planning requires knowledge of wills,trusts,and taxes.

Question 15

Your gross estate is composed only of nonprobate property.

Question 16

Probate property includes only real property.

Question 17

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

Question 18

Insufficient capital can cause problems paying estate taxes.

Question 19

Minors can handle large sums of money and property.

Question 20

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

Question 21

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

Question 22

A codicil is a legal method of modifying a will.

Question 23

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

Question 24

The federal estate tax is similar for all states.

Question 25

Only the wealthy need an attorney to prepare their wills.

Question 26

Dying intestate means dying with a valid will.

Question 27

The appointment clause in a will affirms the apportionment of taxes among various beneficiaries of the will.

Question 28

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

Question 29

Intestacy results from dying without a valid will.

Question 30

The adoption of a child will cause estate transfer costs to change.

Question 31

The law automatically modifies a will under certain circumstances,which vary from state to state but generally center on divorce,marriage,birth,or adoption.

Question 32

One should make copies of one's will and store them in different places.

Question 33

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

Question 34

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

Question 35

A new will revokes previous wills only if a statement such as "This will revokes all previous wills" appears.

Question 36

A will is required by state law.

Question 37

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

Question 38

A valid will cannot be contested.

Question 39

The intestate process is federally mandated,and is common across all states.

Question 40

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

Question 41

A husband and wife together could give $20,000 to their niece with no gift tax liability even if the entire $20,000 came from the wife's checking account.

Question 42

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

Question 43

The taxable estate is less than the adjusted gross estate.

Question 44

A testator can revoke a will by making a later will that is inconsistent with a former will.

Question 45

In an irrevocable living trust,the donor relinquishes his title to the property.

Question 46

A durable power of attorney for health care allows loved ones to terminate life support.

Question 47

An executor plays an important function during the probate process.

Question 48

A letter of last instruction is a legal document..

Question 49

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

Question 50

A testamentary trust is established in a will and is funded through a probate process.

Question 51

A trust is a means of transferring property.

Question 52

Most states require witnesses to sign in the presence of one another after they witness the signing by the testator.

Question 53

A power of attorney allows an individual to write a will.

Question 54

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

Question 55

Joint ownership of assets is an effective substitute for a will.

Question 56

Gift giving can reduce estate tax liability.

Question 57

The best choice for a trustee is a family member.

Question 58

Death will erase any debts existing at that time.

Question 59

In a revocable living trust,the grantor reserves the right to revoke the trust and regain trust property.

Question 60

Mental capacity requires an individual to be at least 21 years of age.

Question 61

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

Question 62

Which of the following situations calls especially for an estate plan based on the people planning perspective?

A) Working couple with handicapped 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 63

The goal of estate planning is to:

A) accumulate.
B) preserve.
C) distribute.
D) all of the above
E) none of the above

Question 64

_____ 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 65

The marital deduction provides no exemption from taxation when any property is transferred between spouses.

Question 66

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 the above
E) none of the above

Question 67

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 the above
E) none of the above

Question 68

The unlimited marital deduction requires the filing of a separate tax return.

Question 69

_____ would represent a second level death-related cost.

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

Question 70

The gift tax law allows a person to give gifts up to $10,000 tax free for the year 2014..

Question 71

Your real and personal property that can be transferred according to the terms of a will is called your:

A) gross estate.
B) probate estate.
C) net estate.
D) estate.
E) proper estate.

Question 72

Charitable contributions given during life provide an income tax deduction and remove property from the estate.

Question 73

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 74

Trust services are used exclusively by those who cannot handle large sums of money,such as minors.

Question 75

Life insurance could alleviate estate problems caused by:

A) inflation.
B) improper management.
C) disabilities.
D) lack of liquidity.
E) incorrect vehicle of transfer.

Question 76

Estate planning is designed to:

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

Question 77

The applicable exclusion amount from estate tax is $5,340,000 for 2014.

Question 78

The top federal gift and estate tax rate for 2014 is expected to be around 40 percent.

Question 79

Which of the following leads to an estate breaking up?

A) Death related costs
B) Inflation
C) Improper use of vehicles of transfer
D) Lack of liquidity
E) All of the above

Question 80

You should review your estate plan every:

A) 1-2 years.
B) 2-3 years.
C) 3-5 years.
D) 5-10 years.
E) never.