Beruflich Dokumente
Kultur Dokumente
Student: ___________________________________________________________________________
1. LIMRA International, a financial services research organization, provides information about estate
planning to survivors in the form of a booklet.
True False
2. Estate planning is a definite plan for the administration and disposition of one's property during one's
lifetime and at one's death.
True False
4. A large percentage of people do little or nothing to provide for those who will survive them.
True False
5. If you never married, you don't need to organize your financial affairs.
True False
9. Estate planning includes a subject most people would rather avoid: death-your own or that of your
spouse.
True False
10. An estate plan is usually implemented by a will and one or more trust agreements.
True False
12. Unmarried couples face formidable retirement and estate planning challenges.
True False
13. Last-minute "death-bed" estate planning may fail to carry out your wishes.
True False
14. When death occurs, proof of claims must be produced or the claims will not be processed.
True False
16. A will is a legal declaration of a person's mind as to the disposition of his or her property after death.
True False
17. If you die intestate, the state's law of descent and distribution becomes your will.
True False
19. If you marry after you have made a will, the will is revoked automatically unless certain conditions are
met.
True False
20. If you marry after you have made a will, you are better off drawing a new will to fit your new
circumstances.
True False
21. The cost of preparing a will varies from place to place.
True False
22. Generally, the cost of writing a will is more than that for writing a living trust.
True False
24. You should avoid probate because it is expensive, lengthy, and public.
True False
27. Wills have existed for thousands of years; the oldest known will was written by an Egyptian pharaoh in
2448 BC.
True False
28. A simple will creates lower overall taxation for all individuals.
True False
31. A guardian is a person or an institution that holds property for the benefit of someone else.
True False
32. Making any changes on the face of your will can invalidate it.
True False
33. A codicil is a document that explains, adds, or deletes provisions in your existing will.
True False
35. The adjusted gross estate is equal to the gross estate minus debts and costs.
True False
36. Probate is less expensive, quicker, and private than a living trust.
True False
37. The main advantage of the exemption trust will is that it eliminates future taxation of the exemption
amount and any growth in it.
True False
39. A beneficiary is a person who has been named to receive property under the will.
True False
41. The state law sets the fees for executors, whether professionals or friends.
True False
42. If only a few changes are needed in your will, adding a codicil may be the best choice.
True False
43. A living will provides for your wishes to be followed if you become so physically or mentally disabled
that you are unable to act on your own behalf.
True False
46. An ethical will is a way to pass on your values and beliefs to your heirs.
True False
47. Related to the concept of a living will is a durable power of attorney also known as a health care proxy.
True False
48. You can assign a durable power of attorney to anyone you choose.
True False
49. A letter of last instruction can provide your heirs with important information.
True False
50. Your estate consists of everything you own, including interests in trusts and powers of appointment.
True False
51. A trust is a legal arrangement through which a trustee holds your assets for your benefit or that of your
beneficiaries.
True False
52. An inter vivos trust is a property management arrangement that you establish while you are alive.
True False
55. With a marital-deduction trust, you can leave your spouse any money that doesn't go into a credit-
shelter trust.
True False
56. Perhaps the most popular form of marital trust is the Q-TIP trust.
True False
57. A credit-shelter trust is known as a bypass trust, a "residuary" trust, an A/B trust, or a family trust.
True False
58. A qualified personal residence trust, or QPRT, lets you get your home or vacation home out of your
estate.
True False
59. A generation-skipping trust allows people to directly leave a substantial amount of money to their
grandchildren.
True False
60. Community property is any property that has been acquired by only one of the spouses during the
marriage, but not by gift, devise, bequest or inheritance, or, by the income therefrom.
True False
61. Life insurance may be a reasonable, feasible, and economical means of paying your estate tax.
True False
63. According to a recent American Association of Retired Persons survey, over 50 percent of Americans
age 45 or older have not drawn up a will.
True False
64. A unique feature of a self-declaration trust is that the creator of the trust is also the trustee.
True False
65. Which one of the following statements is true about estate planning?
A. Estate planning is only for the rich.
B. It is always easy to plan for your family's financial security in the event of your death.
C. Most people provide a lifetime of income for those who will survive them.
D. Most people give a tremendous amount of attention to estate planning.
E. Many people do little to provide for those who will survive them.
69. Estate planning has two parts. The first part consists of:
A. building your estate through savings, investments, and insurance.
B. transferring your estate, while you are alive, in the manner you have specified.
C. deciding who is going to get what.
D. evaluating your assets and liabilities.
E. planning for the period right after you die.
70. Estate planning has two parts. The second part of estate planning consists of:
A. building your estate through working.
B. transferring your estate, at your death, in the manner you have specified.
C. deciding who should be your attorney.
D. evaluating your assets and liabilities.
E. buying life insurance.
71. In estate planning, if you are married:
A. you do not need a will as your spouse is entitled to all of your assets.
B. your estate planning becomes simpler once you have children.
C. you should let your spouse do all of your estate planning.
D. your situation is more complex than when you were still single.
E. your planning consists solely of naming beneficiaries for your life insurance.
74. Which of the following is an important document needed for estate planning?
A. Your driver's license
B. Your transcript from college
C. Your birth certificate
D. Your birthday cards
E. All of these documents are needed in estate planning.
75. Gerry Legere has died without writing a will. What is the legal term for this?
A. Probate
B. Intestate
C. Testamentary
D. Statutory
E. Codicil
76. Gerald Wilkins owns a home worth $250,000, a car worth $15,000, various investments worth
$600,000 and other personal assets worth $25,000. What are these things to Gerald?
A. Estate
B. Will
C. Trust
D. Probate
E. Liabilities
77. Joseph Vu has assets worth $1,200,000. He has written a legal document that specifies that these
assets be divided equally between his wife and his two sons upon his death. What is this legal document?
A. Estate
B. Will
C. Trust
D. Probate
E. Liabilities
78. Grady Perdue has assets worth $1,500,000 and has written a legal document that specifies that all of
his money go to his children. After he dies, there is a legal process to determine whether his document
specifying how his assets be divided is valid. This is also the legal process by which his executor manages
and distributes his property. What is this legal process called?
A. Estate
B. Will
C. Trust
D. Probate
E. Terms of distribution
82. Which one of the following wills is called an "I love you" will?
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. Holographic
83. Which one of the following wills leaves everything to your spouse?
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. Living
85. Which one of the following wills automatically leaves one-half of your adjusted gross estate to your
spouse?
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. A/B trust
86. Under what type of will is half of your estate taxed at your death and half at your spouse's death?
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. A/B trust
87. Under what type of will does everything pass to your spouse, with the exception of an amount equal to
the exemption, which passes into trust?
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. Living
88. Which type of will allows you to pass to your spouse any amount that satisfies your family objective?
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. A/B trust
89. A handwritten will is called a:
A. holographic.
B. formal.
C. statutory.
D. exemption trust.
E. informal.
90. Which will should be written, dated, and signed entirely in your own handwriting?
A. Informal
B. Marital trust
C. Formal
D. Statutory
E. Holographic
91. Which one of the following provides for the disposition of your assets and is usually prepared with an
attorney's assistance?
A. Medical directives
B. Holographic will
C. Formal will
D. Letter of last instruction
E. Living will
92. Which type of will involves serious risks of invalidity and may be out of date with respect to current
law?
A. Marital share
B. Statutory
C. Formal
D. Exemption trust
E. Living
93. A person who will follow your instructions specified in your will is called a:
A. beneficiary.
B. trustor.
C. witness.
D. executor.
E. codicil.
96. A documentary agreement between spouses before marriage in which one or both parties often waive
a right to receive property under the other's will or under state law is called a:
A. letter of last instruction.
B. codicil.
C. prenuptial agreement.
D. marital agreement.
E. marital share will.
97. A person who assumes the responsibilities of providing the children with personal care and of
managing the estate for them is called a:
A. beneficiary.
B. executor.
C. trustee.
D. guardian.
E. executrix.
98. A person or institution that holds or generally manages property for the benefit of someone else under
a trust agreement is called a:
A. beneficiary.
B. executor.
C. trustee.
D. guardian.
E. executrix.
100. Benjamin Wiley is married and has assets totaling $7 million. What type of will would most likely
result in the lowest overall amount of federal estate taxes? Assume the exemption amount is $3 million.
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. Living
101. Matthew Miller has created a will and left everything to his wife Kate. What type of will has he
created?
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. Living
102. Kate Wilson has created a will that leaves one-half of her adjusted gross estate to her husband,
Matthew. What type of will has she created?
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. Living
103. Will Jones has created a will that leaves everything to his wife except an exemption amount of $2
million. This exemption amount passes into a trust. What type of will has Will created?
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. Living
104. James Fitzwater has created a will that leaves exactly $2 million to his wife in anticipation of her
income needs. What type of will has James created?
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. Living will
105. Brenda Johnson has used a preprinted form that she got from a stationery store to create her will.
What type of will has she created?
A. Holographic
B. Formal
C. Statutory
D. Casual
E. Living
106. Brenda Johnson has used a preprinted form that she got from the internet to create her will. However,
she was unhappy with one section of the will and crossed out the parts she didn't like and hand wrote the
changes she wanted. The changes that she made most likely made her will:
A. invalid.
B. an A/B trust.
C. a letter of last instruction.
D. a marital trust.
E. an exemption trust.
107. Benjamin Barry has been named by Andie Anderson to follow her instructions and distribute her
assets as she has designated in her will, pay any bills, and collect any money owed to her. To which
position has Benjamin been named?
A. Executor
B. Trustee
C. Guardian
D. Beneficiary
E. Agent
108. Hugh Bowersox has been selected by Sandra Tyler to assume the responsibility of raising her children
and managing her estate for those children if she were to die. In what capacity would Hugh be acting?
A. Executor
B. Trustee
C. Guardian
D. Beneficiary
E. Agent
109. Lucy Kelson has been selected to manage the trust assets of Rodney Peterson until he reaches the
age of 30. Rodney is currently 21. In what capacity would Lucy be acting?
A. Executrix
B. Trustee
C. Guardian
D. Beneficiary
E. Administrator
110. George Wade has been selected to receive the assets of his brother Kyle in the event of Kyle's death.
What is George?
A. Executor
B. Trustee
C. Guardian
D. Beneficiary
E. Agent
111. A legal arrangement through which your assets are held by a trustee for your benefit or that of your
beneficiaries is called a:
A. codicil.
B. power of attorney.
C. proxy.
D. rider.
E. trust.
112. If you establish a ____________ trust, you retain the right to end the trust or change its terms during
your lifetime.
A. irrevocable
B. revocable
C. living
D. self-declaration
E. testamentary
113. If you establish a ____________ trust, you cannot change its terms or end it.
A. irrevocable
B. revocable
C. living
D. self-declaration
E. testamentary
114. A ____________ trust is a property management arrangement that you establish while you are alive.
A. guardian
B. trustee
C. living
D. power of attorney
E. estate
115. A trust established by your will that becomes effective upon your death is called a ____________ trust.
A. testamentary
B. living
C. revocable
D. irrevocable
E. insurance
116. Under what type of ownership is the property considered owned 50-50 for estate tax purposes and
passed automatically to your spouse at your death?
A. Tenants in common
B. Tenancy by the entirety
C. Joint tenants with the right of survivorship
D. Tenancy by seniority
E. Tenancy by default
117. In what type of joint ownership may neither spouse sell the property without the consent of the
other?
A. Tenancy by default
B. Tenancy by the entirety
C. Tenancy in common
D. Joint tenants with the right of survivorship
E. Simple tenancy
118. A surgeon, who will soon finish paying off college loans, might want to set up a:
A. credit-shelter trust.
B. marital-deduction trust.
C. living trust.
D. inter vivos trust.
E. disclaimer trust.
119. In what type of ownership is each individual considered to own a proportionate share for tax purposes
with only your share being included in your estate?
A. Tenancy by default
B. Tenancy by the entirety
C. Tenants in common
D. Joint tenants with the right of survivorship
E. Tenancy by performance
120. Gary Ruhle has assets worth $2,400,000. Since he plans to travel and does not want to oversee these
assets, he has created a legal arrangement so the assets can be managed by an officer of his local bank.
What type of legal arrangement has he likely made?
A. Guardianship
B. Statutory will
C. Trust agreement
D. Living will
E. Letter of instruction
122. Sally Forth has a trust that she can end at any time she wants. She has assets in the trust that she
thinks she may need to use at a later date. What type of trust does Sally have?
A. Revocable trust
B. Irrevocable trust
C. Bargain trust
D. Negotiable trust
E. Non-negotiable trust
123. A federal tax levied on the right of a deceased person to transmit his or her property and life
insurance at death is called a ____________ tax.
A. estate income
B. trust income
C. inheritance
D. gift
E. estate
124. A tax levied on the right of an heir to receive all or part of the estate and life insurance proceeds of a
deceased person is called a ____________ tax.
A. estate income
B. trust income
C. inheritance
D. gift
E. estate
125. A federal and state tax levied on the privilege of making gifts to others is called a ____________ tax.
A. estate income
B. trust income
C. inheritance
D. gift
E. estate
126. As of 2016, what is the maximum yearly amount that an individual can give as a gift without incurring
gift tax liability or having to report the gift to the IRS?
A. $5,000
B. $14,000
C. $15,000
D. $20,000
E. $25,000
127. How many months after your death is the federal estate tax due and payable in cash?
A. 3
B. 6
C. 9
D. 12
E. 15
128. Gerald Wilkins owns a home worth $250,000, a car worth $15,000, various investments worth
$600,000 and other personal assets worth $25,000. He still owes $125,000 on his mortgage and $5,000 on
a car loan. The probate and administration costs of his estate are estimated at $5,000. What is his
estimated net taxable estate?
A. $850,000
B. $870,000
C. $875,000
D. $755,000
E. $760,000
129. Advance directives are legal documents that allow you to state what kind of health care you want if
you were too ill to speak for yourself. Advance directives most often include which of the following?
A. Living will
B. Health care proxy
C. Letter of last instruction
D. Advance directives include all of these provisions.
E. Durable power of attorney
130. George Smith worries that his deteriorating health is going to make him incapacitated and unable to
conduct his personal affairs. He wants to grant his nephew, Brandon Smith, the ability to act on his behalf.
To do this, what document would he most likely need?
A. Letter of last instruction
B. Durable power of attorney
C. Will
D. Revocable trust
E. Irrevocable trust
131. Maryanne Strothman wants to leave some words of encouragement and spiritual advice to her
children to encourage their faith in the event that something happens to her. What type of document
would be best for her to prepare?
A. Ethical will
B. Durable power of attorney
C. Letter of last instruction
D. Codicil
E. Formal will
132. Which of the following is not a true statement about a holographic will?
A. It is handwritten.
B. It should be dated in your own handwriting.
C. It is always prepared by an attorney.
D. It should be signed in your own handwriting.
E. Some states may not recognize it.
133. Which of the following would keep you from being an executor of a will?
A. Being in the military
B. Being 16 years of age
C. Being unmarried
D. Being over 65 years of age
E. Being a family member of the deceased
134. Which of the following would keep you from being an executor of a will?
A. Having been convicted of a felony
B. Being over 70 years of age
C. Being married
D. Being a coworker of the deceased
E. Being a child of the deceased
135. The American Taxpayer Relief Act of 2012 provides a permanent gift and estate tax exemption of how
much for individuals?
A. $2.0 million
B. $4.5 million
C. $5.45 million
D. $6.75 million
E. $8.0 million
136. A simple document stating that anything you may have neglected to place in your trust during your
lifetime should be placed in it at your death is called a:
A. letter of last instruction.
B. ethical will.
C. prenuptial agreement.
D. codicil.
E. pourover will.
137. If your beneficiary is too young or unable to handle money wisely, which kind of trust allows the
beneficiary to receive small amounts of money at specified intervals?
A. A spendthrift trust
B. A charitable lead trust
C. A charitable reminder trust
D. A self-declaration trust
E. A generation-skipping trust
144. Which of the following are rules to remember when writing a will?
A. In most states, you must be 18 years of age or older.
B. A will must be written in sound judgment and mental capacity to be valid.
C. The document must clearly state that it is your will.
D. The will must name an executor.
E. All of these are rules to remember.
148. Which of the following is a trust established while you are living and receives your life insurance
benefits upon your death and administers them in an agreed-on manner?
A. Grantor retained annuity trust
B. Life insurance trust
C. Marital-deduction trust
D. Self-declaration trust
E. Charitable lead trust
149. Which of the following is a trust that shelters valuable assets that you can pass on to your heirs with
minimal taxes and lets you receive an annuity for as long as the trust lasts?
A. Grantor retained annuity trust
B. Life insurance trust
C. Marital-deduction trust
D. Self-declaration trust
E. Charitable lead trust
150. Which of the following is a trust that pays a specified charity income from a donated asset for a set
number of years and then transfers the principal to the donor’s beneficiaries with reduced estate or gift
taxes at the end of the term?
A. Grantor retained annuity trust
B. Life insurance trust
C. Marital-deduction trust
D. Self-declaration trust
E. Charitable lead trust
151. There are 10 commandments of making your will listed in this chapter. Describe 5 of these.
152. If you are active online, what steps should you take to write a social media will to handle the closure
of your email addresses, social media profiles, and blogs after you die?
153. What is estate planning and how does your personal situation affect that planning?
154. Explain what a will is and what occurs at your death if you do not have one.
156. What are the federal and state tax considerations in estate planning?
1. LIMRA International, a financial services research organization, provides information about estate
planning to survivors in the form of a booklet.
TRUE
2. Estate planning is a definite plan for the administration and disposition of one's property during one's
lifetime and at one's death.
TRUE
4. A large percentage of people do little or nothing to provide for those who will survive them.
TRUE
9. Estate planning includes a subject most people would rather avoid: death-your own or that of your
spouse.
TRUE
12. Unmarried couples face formidable retirement and estate planning challenges.
TRUE
13. Last-minute "death-bed" estate planning may fail to carry out your wishes.
TRUE
14. When death occurs, proof of claims must be produced or the claims will not be processed.
TRUE
16. A will is a legal declaration of a person's mind as to the disposition of his or her property after death.
TRUE
17. If you die intestate, the state's law of descent and distribution becomes your will.
TRUE
19. If you marry after you have made a will, the will is revoked automatically unless certain conditions are
met.
TRUE
22. Generally, the cost of writing a will is more than that for writing a living trust.
FALSE
24. You should avoid probate because it is expensive, lengthy, and public.
TRUE
27. Wills have existed for thousands of years; the oldest known will was written by an Egyptian pharaoh in
2448 BC.
TRUE
28. A simple will creates lower overall taxation for all individuals.
FALSE
31. A guardian is a person or an institution that holds property for the benefit of someone else.
FALSE
32. Making any changes on the face of your will can invalidate it.
TRUE
33. A codicil is a document that explains, adds, or deletes provisions in your existing will.
TRUE
36. Probate is less expensive, quicker, and private than a living trust.
FALSE
37. The main advantage of the exemption trust will is that it eliminates future taxation of the exemption
amount and any growth in it.
TRUE
39. A beneficiary is a person who has been named to receive property under the will.
TRUE
41. The state law sets the fees for executors, whether professionals or friends.
TRUE
42. If only a few changes are needed in your will, adding a codicil may be the best choice.
TRUE
43. A living will provides for your wishes to be followed if you become so physically or mentally disabled
that you are unable to act on your own behalf.
TRUE
46. An ethical will is a way to pass on your values and beliefs to your heirs.
TRUE
47. Related to the concept of a living will is a durable power of attorney also known as a health care proxy.
TRUE
48. You can assign a durable power of attorney to anyone you choose.
TRUE
49. A letter of last instruction can provide your heirs with important information.
TRUE
51. A trust is a legal arrangement through which a trustee holds your assets for your benefit or that of your
beneficiaries.
TRUE
52. An inter vivos trust is a property management arrangement that you establish while you are alive.
TRUE
54. A disclaimer trust is designed for the couple who do not yet have enough assets to need a credit-
shelter trust.
TRUE
56. Perhaps the most popular form of marital trust is the Q-TIP trust.
TRUE
57. A credit-shelter trust is known as a bypass trust, a "residuary" trust, an A/B trust, or a family trust.
TRUE
58. A qualified personal residence trust, or QPRT, lets you get your home or vacation home out of your
estate.
TRUE
59. A generation-skipping trust allows people to directly leave a substantial amount of money to their
grandchildren.
TRUE
61. Life insurance may be a reasonable, feasible, and economical means of paying your estate tax.
TRUE
63. According to a recent American Association of Retired Persons survey, over 50 percent of Americans
age 45 or older have not drawn up a will.
TRUE
64. A unique feature of a self-declaration trust is that the creator of the trust is also the trustee.
TRUE
69. Estate planning has two parts. The first part consists of:
A. building your estate through savings, investments, and insurance.
B. transferring your estate, while you are alive, in the manner you have specified.
C. deciding who is going to get what.
D. evaluating your assets and liabilities.
E. planning for the period right after you die.
70. Estate planning has two parts. The second part of estate planning consists of:
A. building your estate through working.
B. transferring your estate, at your death, in the manner you have specified.
C. deciding who should be your attorney.
D. evaluating your assets and liabilities.
E. buying life insurance.
75. Gerry Legere has died without writing a will. What is the legal term for this?
A. Probate
B. Intestate
C. Testamentary
D. Statutory
E. Codicil
76. Gerald Wilkins owns a home worth $250,000, a car worth $15,000, various investments worth
$600,000 and other personal assets worth $25,000. What are these things to Gerald?
A. Estate
B. Will
C. Trust
D. Probate
E. Liabilities
78. Grady Perdue has assets worth $1,500,000 and has written a legal document that specifies that all of
his money go to his children. After he dies, there is a legal process to determine whether his document
specifying how his assets be divided is valid. This is also the legal process by which his executor manages
and distributes his property. What is this legal process called?
A. Estate
B. Will
C. Trust
D. Probate
E. Terms of distribution
82. Which one of the following wills is called an "I love you" will?
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. Holographic
85. Which one of the following wills automatically leaves one-half of your adjusted gross estate to your
spouse?
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. A/B trust
87. Under what type of will does everything pass to your spouse, with the exception of an amount equal to
the exemption, which passes into trust?
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. Living
88. Which type of will allows you to pass to your spouse any amount that satisfies your family objective?
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. A/B trust
90. Which will should be written, dated, and signed entirely in your own handwriting?
A. Informal
B. Marital trust
C. Formal
D. Statutory
E. Holographic
91. Which one of the following provides for the disposition of your assets and is usually prepared with an
attorney's assistance?
A. Medical directives
B. Holographic will
C. Formal will
D. Letter of last instruction
E. Living will
93. A person who will follow your instructions specified in your will is called a:
A. beneficiary.
B. trustor.
C. witness.
D. executor.
E. codicil.
96. A documentary agreement between spouses before marriage in which one or both parties often waive
a right to receive property under the other's will or under state law is called a:
A. letter of last instruction.
B. codicil.
C. prenuptial agreement.
D. marital agreement.
E. marital share will.
97. A person who assumes the responsibilities of providing the children with personal care and of
managing the estate for them is called a:
A. beneficiary.
B. executor.
C. trustee.
D. guardian.
E. executrix.
100. Benjamin Wiley is married and has assets totaling $7 million. What type of will would most likely
result in the lowest overall amount of federal estate taxes? Assume the exemption amount is $3 million.
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. Living
102. Kate Wilson has created a will that leaves one-half of her adjusted gross estate to her husband,
Matthew. What type of will has she created?
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. Living
103. Will Jones has created a will that leaves everything to his wife except an exemption amount of $2
million. This exemption amount passes into a trust. What type of will has Will created?
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. Living
105. Brenda Johnson has used a preprinted form that she got from a stationery store to create her will.
What type of will has she created?
A. Holographic
B. Formal
C. Statutory
D. Casual
E. Living
106. Brenda Johnson has used a preprinted form that she got from the internet to create her will. However,
she was unhappy with one section of the will and crossed out the parts she didn't like and hand wrote the
changes she wanted. The changes that she made most likely made her will:
A. invalid.
B. an A/B trust.
C. a letter of last instruction.
D. a marital trust.
E. an exemption trust.
108. Hugh Bowersox has been selected by Sandra Tyler to assume the responsibility of raising her children
and managing her estate for those children if she were to die. In what capacity would Hugh be acting?
A. Executor
B. Trustee
C. Guardian
D. Beneficiary
E. Agent
109. Lucy Kelson has been selected to manage the trust assets of Rodney Peterson until he reaches the
age of 30. Rodney is currently 21. In what capacity would Lucy be acting?
A. Executrix
B. Trustee
C. Guardian
D. Beneficiary
E. Administrator
111. A legal arrangement through which your assets are held by a trustee for your benefit or that of your
beneficiaries is called a:
A. codicil.
B. power of attorney.
C. proxy.
D. rider.
E. trust.
112. If you establish a ____________ trust, you retain the right to end the trust or change its terms during
your lifetime.
A. irrevocable
B. revocable
C. living
D. self-declaration
E. testamentary
114. A ____________ trust is a property management arrangement that you establish while you are alive.
A. guardian
B. trustee
C. living
D. power of attorney
E. estate
115. A trust established by your will that becomes effective upon your death is called a ____________ trust.
A. testamentary
B. living
C. revocable
D. irrevocable
E. insurance
117. In what type of joint ownership may neither spouse sell the property without the consent of the
other?
A. Tenancy by default
B. Tenancy by the entirety
C. Tenancy in common
D. Joint tenants with the right of survivorship
E. Simple tenancy
118. A surgeon, who will soon finish paying off college loans, might want to set up a:
A. credit-shelter trust.
B. marital-deduction trust.
C. living trust.
D. inter vivos trust.
E. disclaimer trust.
120. Gary Ruhle has assets worth $2,400,000. Since he plans to travel and does not want to oversee these
assets, he has created a legal arrangement so the assets can be managed by an officer of his local bank.
What type of legal arrangement has he likely made?
A. Guardianship
B. Statutory will
C. Trust agreement
D. Living will
E. Letter of instruction
123. A federal tax levied on the right of a deceased person to transmit his or her property and life
insurance at death is called a ____________ tax.
A. estate income
B. trust income
C. inheritance
D. gift
E. estate
124. A tax levied on the right of an heir to receive all or part of the estate and life insurance proceeds of a
deceased person is called a ____________ tax.
A. estate income
B. trust income
C. inheritance
D. gift
E. estate
126. As of 2016, what is the maximum yearly amount that an individual can give as a gift without incurring
gift tax liability or having to report the gift to the IRS?
A. $5,000
B. $14,000
C. $15,000
D. $20,000
E. $25,000
127. How many months after your death is the federal estate tax due and payable in cash?
A. 3
B. 6
C. 9
D. 12
E. 15
129. Advance directives are legal documents that allow you to state what kind of health care you want if
you were too ill to speak for yourself. Advance directives most often include which of the following?
A. Living will
B. Health care proxy
C. Letter of last instruction
D. Advance directives include all of these provisions.
E. Durable power of attorney
130. George Smith worries that his deteriorating health is going to make him incapacitated and unable to
conduct his personal affairs. He wants to grant his nephew, Brandon Smith, the ability to act on his behalf.
To do this, what document would he most likely need?
A. Letter of last instruction
B. Durable power of attorney
C. Will
D. Revocable trust
E. Irrevocable trust
132. Which of the following is not a true statement about a holographic will?
A. It is handwritten.
B. It should be dated in your own handwriting.
C. It is always prepared by an attorney.
D. It should be signed in your own handwriting.
E. Some states may not recognize it.
133. Which of the following would keep you from being an executor of a will?
A. Being in the military
B. Being 16 years of age
C. Being unmarried
D. Being over 65 years of age
E. Being a family member of the deceased
135. The American Taxpayer Relief Act of 2012 provides a permanent gift and estate tax exemption of how
much for individuals?
A. $2.0 million
B. $4.5 million
C. $5.45 million
D. $6.75 million
E. $8.0 million
136. A simple document stating that anything you may have neglected to place in your trust during your
lifetime should be placed in it at your death is called a:
A. letter of last instruction.
B. ethical will.
C. prenuptial agreement.
D. codicil.
E. pourover will.
144. Which of the following are rules to remember when writing a will?
A. In most states, you must be 18 years of age or older.
B. A will must be written in sound judgment and mental capacity to be valid.
C. The document must clearly state that it is your will.
D. The will must name an executor.
E. All of these are rules to remember.
148. Which of the following is a trust established while you are living and receives your life insurance
benefits upon your death and administers them in an agreed-on manner?
A. Grantor retained annuity trust
B. Life insurance trust
C. Marital-deduction trust
D. Self-declaration trust
E. Charitable lead trust
150. Which of the following is a trust that pays a specified charity income from a donated asset for a set
number of years and then transfers the principal to the donor’s beneficiaries with reduced estate or gift
taxes at the end of the term?
A. Grantor retained annuity trust
B. Life insurance trust
C. Marital-deduction trust
D. Self-declaration trust
E. Charitable lead trust
151. There are 10 commandments of making your will listed in this chapter. Describe 5 of these.
Blooms: Understand
Gradable: manual
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Level of Difficulty: Intermediate
Topic: Wills
152. If you are active online, what steps should you take to write a social media will to handle the closure
of your email addresses, social media profiles, and blogs after you die?
Blooms: Understand
Gradable: manual
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Level of Difficulty: Intermediate
Topic: Wills
153. What is estate planning and how does your personal situation affect that planning?
Estate planning is a definite plan for the administration and disposition of one's property during one's
lifetime and at one's death. Estate planning is an essential part of retirement planning and an integral part
of financial planning. It has two components. The first consists of building your estate through savings,
investments, and insurance. The second involves transferring your estate, at your death, in the manner
you have specified. The personal aspects of estate planning depend on whether you are married, single, or
have a new lifestyle. If you are married, your estate planning involves the interests of at least two people;
more if there are children. Never having been married does not eliminate the need to arrange for the
disposition of your assets. Nontraditional households have unique estate planning problems.
Blooms: Understand
Gradable: manual
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Level of Difficulty: Intermediate
Topic: Estate plans and considerations
154. Explain what a will is and what occurs at your death if you do not have one.
A will is a legal declaration of a person's mind as to the disposition of his or her property after death. Thus,
a will is a way to transfer your property according to your wishes after you die. If there is no will, the state
in which you legally reside steps in and controls the distribution of your estate without regard for your
wishes. Legally then, the state's law of descent and distribution becomes your will.
Blooms: Understand
Gradable: manual
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Level of Difficulty: Intermediate
Topic: Wills
Wills and trusts are tools of estate planning. The four types of wills are the simple will, the traditional marital share will,
the exemption trust will, and the stated dollar amount will. Wills provide a way to transfer your property according to
your wishes after you die, and can be designed to help reduce, or even eliminate, estate taxes from the process.
Establishing a trust can be an excellent way to manage the assets of your estate for your benefit or that of your
beneficiaries. Trusts can be revocable or irrevocable. Some forms of trusts include credit-shelter trusts, disclaimer
trusts, living trusts, testamentary trusts, and life insurance trusts. An estate attorney can advise you about the right
type of trust for you. Trusts are a means of transferring assets to your beneficiaries and can also help reduce, or even
eliminate, estate taxes. Trusts can also help avoid the probate process.
Blooms: Understand
Gradable: manual
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Learning Objective: 19-04 Appraise various types of trusts and estates.
Level of Difficulty: Intermediate
Topic: Types of trusts
Topic: Wills
156. What are the federal and state tax considerations in estate planning?
The tax aspects of estate planning have changed considerably because of recent major changes in the
federal tax structure. The four major federal and state taxes that must be considered in planning your
estate are estate taxes, estate and trust income taxes, inheritance taxes, and gift taxes.
Blooms: Remember
Gradable: manual
Learning Objective: 19-05 Evaluate the effects of federal and state taxes on estate planning.
Level of Difficulty: Intermediate
Topic: Taxation and estate planning
Individual circumstances will dictate whether it makes sense to establish a trust. Some common benefits
are: to reduce or otherwise provide for payment of estate taxes, avoid probate and transfer your assets
immediately to your beneficiaries, free yourself from management of your assets while you receive a
regular income from the trust, provide income for a surviving spouse or other beneficiaries, and to ensure
that your property serves a desired purpose after your death.
Blooms: Understand
Gradable: manual
Learning Objective: 19-04 Appraise various types of trusts and estates.
Level of Difficulty: Basic
Topic: Types of trusts
Chapter 19 Testbank - Static Summary
Category # of Questio
ns
Accessibility: Keyboard Navigation 150
Blooms: Analyze 2
Blooms: Apply 1
Blooms: Remember 97
Blooms: Understand 57
Gradable: automatic 150
Gradable: manual 7
Learning Objective: 19-01 Analyze the personal aspects of estate planning. 24
Learning Objective: 19-02 Assess the legal aspects of estate planning. 26
Learning Objective: 19-03 Distinguish among various types and formats of wills. 67
Learning Objective: 19-04 Appraise various types of trusts and estates. 33
Learning Objective: 19-05 Evaluate the effects of federal and state taxes on estat 9
e planning.
Level of Difficulty: Advanced 16
Level of Difficulty: Basic 28
Level of Difficulty: Intermediate 113
Topic: Beneficiaries and claims to property 5
Topic: Estate plans and considerations 34
Topic: Estate property, titles, and implications 2
Topic: Legal aspects of estate planning 6
Topic: Lifetime giving 1
Topic: Living wills and other directives 10
Topic: Power of attorney 4
Topic: Taxation and estate planning 13
Topic: Types of trusts 32
Topic: Wills 50