Question 1

A trust may be used to protect a spendthrift child against his or her own folly and against possible exploitation by others.

Accepted Answer

A trust can be used to prevent a child from spending their inheritance recklessly, and it can protect them from outside influences that may take advantage of their financial naivete.

Question 2

An inter-vivos trust may be made revocable,or revocable after a specified time,or irrevocable - each with different objectives and potentially different tax consequences.

Accepted Answer

This statement is true. Inter-vivos trusts, also known as living trusts, can be revocable, meaning the creator of the trust can change or cancel it at any time. They can also be made revocable after a specific time period or event, or they can be irrevocable, meaning they cannot be changed or canceled by the creator once established. The choice of revocability affects the control the creator has over the assets in the trust and can impact tax consequences.

Question 3

Trustees normally collect money for their services through brokerage fees earned from investment in securities for the trust.

Accepted Answer

Trustees typically collect money for their services through direct fees or commissions charged to the trust, not through brokerage fees earned from investments.

Question 4

Assisted suicide includes the acts of aiding and abetting another to commit suicide.

Accepted Answer

Assisted suicide involves a person providing assistance or encouragement to another individual who intends on ending their own life. This could include things like providing the means to commit suicide, offering advice on how to do so, or physically aiding the individual in the act of suicide.

Question 5

State laws,which regulate how property shall be distributed when a resident of the state dies without leaving a will,are called trust laws.

Accepted Answer

State laws that regulate how property shall be distributed when a resident of the state dies without leaving a will are called intestacy laws, not trust laws. Trust laws pertain to the creation and administration of trusts.

Question 6

One element of an estate plan is to consider whether life insurance is appropriate for the needs of beneficiaries.

Accepted Answer

Yes, considering life insurance is an important aspect of estate planning as it can provide financial support to beneficiaries in the event of the policyholder's death.

Question 7

Estate planning is the name given the process of proving the validity of a will in court,coupled with the related matter of administering the decedent's estate.

Accepted Answer

Estate planning is not just about proving the validity of a will in court and administering the decedent's estate. It involves a broader range of legal and financial strategies aimed at ensuring an individual's assets are distributed according to their wishes, minimizing tax liabilities, and protecting their legacy.

Question 8

A fidelity bond insures against losses caused by the dishonest performance of duties by a personal representative.

Accepted Answer

A fidelity bond is a type of insurance that provides coverage for losses caused by the fraudulent or dishonest actions of a personal representative or other individuals in positions of trust. These bonds are commonly used to protect against embezzlement, theft, and other financial crimes.

Question 9

Joint tenancy is a form of joint property ownership allowing parties to avoid all taxes on such owned property.

Accepted Answer

Joint tenancy does not inherently allow parties to avoid taxes on owned property. While it may offer certain tax benefits, such as the ability to bypass probate and receive a stepped-up basis for tax purposes, it does not exempt parties from all taxes related to the property. Taxes may still be owed on any income generated by the property, as well as on any capital gains realized upon the sale of the property.

Question 10

Statutory wills were devised to provide for complex and unusual circumstances of persons who may otherwise die intestate.

Accepted Answer

The answer of Statutory wills were devised to provide for...

Question 11

In 1900,there was no federal income tax or federal estate and gift tax.

Accepted Answer

The federal income tax was not introduced in the United States until the passage of the 16th Amendment in 1913, and the federal estate and gift tax was not introduced until 1916.

Question 12

A serious objection to making a last will is its finality and irrevocability.

Accepted Answer

A last will can be revoked or amended at any time by the testator as long as they have legal capacity to do so.

Question 13

The person who creates an inter-vivo trust may not serve as the trustee of the trust.

Accepted Answer

The person who creates an inter-vivo trust (also known as a living trust) can serve as the trustee of the trust. In fact, most people who create a living trust also serve as the trustee during their lifetime. The purpose of creating a living trust is to have more control over the management and distribution of one's assets while still alive, so serving as the trustee allows the creator to retain that control.

Question 14

A durable power of attorney authorizes one person to handle the estate of another upon the death of the latter.

Accepted Answer

A durable power of attorney only authorizes one person to handle the affairs of another while they are still alive and unable to do so themselves due to incapacity or illness. It does not give the designated person control over the deceased person's estate after their death.

Question 15

Estate planning is an ongoing analysis of what a person owns or expects to own (assets),and what he or she owes to others (liabilities).

Accepted Answer

Estate planning involves analyzing one's assets and liabilities, both currently and in the future. It is an ongoing process that may require adjustments based on changing circumstances.

Question 16

A holographic,un-witnessed will is often as legally effective as a formal,witnessed will.

Accepted Answer

A holographic will, which is handwritten and not witnessed, can be legally effective in many jurisdictions if it meets certain requirements, such as being entirely in the testator's handwriting and clearly expressing the testator's intent to make a testamentary disposition of their property. However, the specific legal effectiveness and requirements can vary significantly by jurisdiction.

Question 17

Estate plans ideally should be customized to fit the unique circumstances and situation of the individual or family for whom the plan is prepared.

Accepted Answer

Estate plans need to be tailored to the individual's or family's specific needs, assets, and goals to ensure that their estate is managed and distributed according to their wishes.

Question 18

The person who creates a testamentary trust may not serve as the trustee of the trust.

Accepted Answer

This is true. The person who creates a testamentary trust, also known as the settlor or grantor, cannot serve as the trustee of the trust. This is because the purpose of a trust is to separate legal ownership from management and control, and having the same person act as both beneficiary and trustee would defeat this purpose. The settlor can, however, name someone else to serve as trustee, or designate a corporate trustee.

Question 19

Estate planning has substantial potential monetary and psychological value for an elderly retired person,but not for a young bachelor or young married couple.

Accepted Answer

Estate planning can have substantial value for anyone, regardless of age or marital status. It is important to have a plan in place to ensure that assets are distributed according to one's wishes, avoid probate and minimize taxes. Additionally, estate planning can include important documents such as powers of attorney and healthcare directives, which can provide peace of mind and ensure that one's wishes are respected in the event of incapacity.

Question 20

Very few adults are able to qualify to act as an executor.

Accepted Answer

Any adult can qualify to act as an executor, provided they are willing and able to fulfill the necessary duties and responsibilities. However, certain factors such as felony convictions or being found mentally incompetent by a court may disqualify someone from serving as an executor.

Quiz 14: Wills, Trusts, and Probate Laws Appendices Glossary Indexes