Test Questions & Answers Ch.19 Estate Planning - Personal Finance 13e Answer Key + Test Bank by Jack Kapoor. DOCX document preview.
Personal Finance, 13e (Kapoor)
Chapter 19 Estate Planning
1) LIMRA International, a financial services research organization, provides information about estate planning to survivors in the form of a booklet.
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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.
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
3) Estate planning is not an essential part of retirement planning.
Difficulty: 1 Easy
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
4) A large percentage of people do little or nothing to provide for those who will survive them.
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
5) If you never married, you don't need to organize your financial affairs.
Difficulty: 1 Easy
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
6) Estate planning is useful only to rich and elderly people.
Difficulty: 1 Easy
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
7) Estate planning is an integral part of financial planning.
Difficulty: 1 Easy
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
8) Most people cannot afford the expense of using trusts.
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
9) Estate planning includes a subject most people would rather avoid: death—your own or that of your spouse.
Difficulty: 1 Easy
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
10) An estate plan is usually implemented by a will and one or more trust agreements.
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
11) Millions of nontraditional households have unique estate planning problems.
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
12) Unmarried couples face formidable retirement and estate planning challenges.
Difficulty: 1 Easy
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
13) Last-minute "death-bed" estate planning may fail to carry out your wishes.
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
14) When death occurs, proof of claims must be produced or the claims will not be processed.
Difficulty: 1 Easy
Topic: Wills
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
15) If you die without a valid will, you die intestate.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
16) A will is a legal declaration of a person's mind as to the disposition of his or her property after death.
Difficulty: 1 Easy
Topic: Wills
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
17) If you die intestate, the state's law of descent and distribution becomes your will.
Difficulty: 3 Hard
Topic: Wills
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
18) It is unnecessary to review and modify your will when you divorce or remarry.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
19) If you marry after you have made a will, the will is revoked automatically unless certain conditions are met.
Difficulty: 3 Hard
Topic: Wills
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
20) If you marry after you have made a will, you are better off drawing a new will to fit your new circumstances.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
21) The cost of preparing a will varies from place to place.
Difficulty: 1 Easy
Topic: Wills
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
22) Generally, the cost of writing a will is more than that for writing a living trust.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
23) Probate is the legal procedure of proving a valid or invalid will.
Difficulty: 2 Medium
Topic: Legal aspects of estate planning
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
24) You should avoid probate because it is expensive, lengthy, and public.
Difficulty: 3 Hard
Topic: Legal aspects of estate planning
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
25) A living trust avoids probate at your death.
Difficulty: 2 Medium
Topic: Legal aspects of estate planning
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
26) Another name for an executor is an executrix.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
27) Wills have existed for thousands of years; the oldest known will was written by an Egyptian pharaoh in 2448 BC.
Difficulty: 3 Hard
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
28) A simple will creates lower overall taxation for all individuals.
Difficulty: 2 Medium
Topic: Taxation and estate planning
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
29) A statutory will is one type of formal will.
Difficulty: 1 Easy
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
30) Your executor can be the trust department of a bank.
Difficulty: 1 Easy
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
31) A guardian is a person or an institution that holds property for the benefit of someone else.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
32) Making any changes on the face of a will, that has been signed and witnessed, can invalidate it.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
33) A codicil is a document that explains, adds, or deletes provisions in your existing will.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
34) A prenuptial agreement is a documentary agreement between spouses after marriage.
Difficulty: 1 Easy
Topic: Estate plans and considerations
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
35) The adjusted gross estate is equal to the gross estate minus debts and costs.
Difficulty: 2 Medium
Topic: Taxation and estate planning
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
36) Probate is less expensive, quicker, and more private than a living trust.
Difficulty: 3 Hard
Topic: Types of trusts
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
37) The main advantage of the exemption trust will is that it eliminates future taxation of the exemption amount and any growth in it.
Difficulty: 3 Hard
Topic: Types of trusts
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
38) A formal will may be either typed or on a preprinted form.
Difficulty: 1 Easy
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
39) A beneficiary is a person who has been named to receive property under the will.
Difficulty: 1 Easy
Topic: Beneficiaries and claims to property
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
40) Joint ownership is a good substitute for a will.
Difficulty: 2 Medium
Topic: Beneficiaries and claims to property; Estate property, titles, and implications
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
41) The state law sets the fees for executors, whether professionals or friends.
Difficulty: 2 Medium
Topic: Legal aspects of estate planning
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
42) If only a few changes are needed in your will, adding a codicil may be the best choice.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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.
Difficulty: 2 Medium
Topic: Living wills and other directives
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
44) A living will is a substitute for a traditional will.
Difficulty: 2 Medium
Topic: Living wills and other directives
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
45) Many states do not recognize living wills.
Difficulty: 2 Medium
Topic: Living wills and other directives
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
46) An ethical will is a way to pass on your values and beliefs to your heirs.
Difficulty: 1 Easy
Topic: Living wills and other directives
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
47) Related to the concept of a living will is a durable power of attorney also known as a health care proxy.
Difficulty: 1 Easy
Topic: Power of attorney
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
48) You can assign a durable power of attorney to anyone you choose.
Difficulty: 1 Easy
Topic: Power of attorney
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
49) A letter of last instruction can provide your heirs with important information, such as the details of your funeral arrangements.
Difficulty: 3 Hard
Topic: Living wills and other directives
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
50) Estate planning requires an inventory of everything you own, including interests in trusts and powers of appointment.
Difficulty: 3 Hard
Topic: Estate plans and considerations
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
51) A trust is a legal arrangement through which a trustee holds your assets for your benefit or that of your beneficiaries.
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
52) An inter vivos trust is a property management arrangement that you establish while you are alive.
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
53) A credit-shelter trust is perhaps the most common estate planning trust.
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
54) A disclaimer trust is designed for the couple who do not yet have enough assets to need a credit-shelter trust but may need one in the future.
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
55) With a marital-deduction trust, you can leave to your spouse any money that doesn't go into a credit-shelter trust.
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
56) Perhaps the most popular form of marital trust is the Q-TIP trust.
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
57) A credit-shelter trust is also known as a bypass trust, a "residuary" trust, an A/B trust, an exemption equivalent trust, or a family trust.
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
58) A qualified personal residence trust, or QPRT, lets you get your home or vacation home out of your estate.
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
59) A generation-skipping trust allows people to directly leave a substantial amount of money to their grandchildren or great-grandchildren.
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
60) Community property is any property that has been acquired by only one of the spouses before the marriage, but not by gift, devise, bequest or inheritance, or by the income therefrom.
Difficulty: 2 Medium
Topic: Beneficiaries and claims to property; Estate property, titles, and implications
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
61) Life insurance may be a reasonable, feasible, and economical means of paying your estate tax.
Difficulty: 2 Medium
Topic: Taxation and estate planning
Learning Objective: 19-05 Evaluate the effects of federal and state taxes on estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
62) Inheritance taxes are imposed only by the state governments.
Difficulty: 1 Easy
Topic: Taxation and estate planning
Learning Objective: 19-05 Evaluate the effects of federal and state taxes on estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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.
Difficulty: 1 Easy
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
64) A unique feature of a self-declaration trust is that the creator of the trust is also the trustee.
Difficulty: 1 Easy
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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) Estate planning does not require taking an inventory of everything you own.
D) Many people give a lot of thought to setting their financial affairs in order.
E) Many people do little to provide for those who will survive them.
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
66) Which is true of estate planning?
A) It includes handling your property while you are alive
B) It includes dealing with what happens to your property after your death
C) It is part of retirement planning
D) It is part of financial planning
E) All of these
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
67) If you are married, your estate planning involves:
A) the interests of at least two people.
B) simple legal requirements.
C) only your children.
D) seeking the services of a securities broker.
E) only yourself.
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
68) Which one of the following statements is correct?
A) An estate plan is usually implemented by a will and trust agreements.
B) Most people do extensive estate planning.
C) Most people think they will live forever.
D) People should not worry about estate planning until they are age 65.
E) Estate planning is really only necessary if you are wealthy.
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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.
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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.
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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.
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
72) Which of the following is a part of estate planning?
A) Making a will
B) Setting up a trust
C) Accumulating savings and investments for your future
D) Disposing of your property at your death
E) All of these are part of estate planning.
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
73) Which of the following is true if you are an unmarried couple?
A) A partner has the same legal rights as a spouse.
B) Unmarried couples can use the marital deduction.
C) Estate planning is less important for unmarried couples.
D) If your partner is not named as the beneficiary, your pension plan proceeds will go to your closest blood relative.
E) Your partner will always receive your pension even if not named as the beneficiary.
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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) Your voter registration
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 2 Medium
Topic: Legal aspects of estate planning
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
77) Joseph Smith has assets worth $1,200,000. He has written a legal document that specifies that these assets are to 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
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 2 Medium
Topic: Legal aspects of estate planning
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
79) A will is:
A) a way to transfer your property according to your wishes after you die.
B) a synonym for a prenuptial agreement.
C) a legal document authorizing someone to act on your behalf.
D) a synonym for a letter of last instruction.
E) a legal arrangement through which your assets are held by someone else.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
80) Which one of the following statements is correct regarding wills?
A) Only married people need a will.
B) Only married people with dependents need a will.
C) Only the rich with considerable estates need a will.
D) Every adult should have a written will.
E) Only senior citizens need a will.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
81) If you die without a valid will:
A) the IRS confiscates your property.
B) a federal court decides how your property will be distributed.
C) your closest relative will receive all your property according to federal law.
D) your letter of instruction becomes your will.
E) your state's law of descent and distribution becomes your will.
Difficulty: 2 Medium
Topic: Legal aspects of estate planning
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
84) Which will is sufficient for most smaller estates?
A) Simple
B) Traditional marital share
C) Exemption trust
D) Stated dollar amount
E) Living
Difficulty: 1 Easy
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 3 Hard
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 2 Medium
Topic: Taxation and estate planning
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 3 Hard
Topic: Types of trusts
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
89) A handwritten will is called a(n):
A) holographic will.
B) formal will.
C) statutory will.
D) exemption trust will.
E) informal will.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
91) Which one of the following may be either typed or on a preprinted form 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
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
92) Which type of will involves serious risks of invalidity that the form is out of date with respect to current law?
A) Marital share
B) Statutory
C) Formal
D) Exemption trust
E) Living
Difficulty: 3 Hard
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
94) Which of the following should prompt you to review your will?
A) You move to a different state.
B) You have sold property mentioned in the will.
C) The size and composition of your estate has changed.
D) You have married, divorced, or remarried.
E) All of these
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
95) Which document identifies the will being amended, confirms the unchanged sections of the will, and changes a provision(s) in your existing will?
A) Codicil
B) Tracer
C) Addendum
D) Rider
E) Floater
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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.
Difficulty: 2 Medium
Topic: Living wills and other directives
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
97) If both parents die at the same time, a(n) ________ is a person who assumes the responsibilities of providing the children with personal care and of managing the estate.
A) beneficiary
B) executor
C) trustee
D) guardian
E) executrix
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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.
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
99) A legal document authorizing someone to act on your behalf, if you become ill or incapacitated, is called a:
A) codicil.
B) rider.
C) durable power of attorney.
D) trustor.
E) proxy.
Difficulty: 2 Medium
Topic: Power of attorney
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
100) Benjamin Wiley is married and has assets totaling $9 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
Explanation: $9/$2 = $4.5 million taxable currently versus $9−$3 = $6 million taxable.
Difficulty: 2 Medium
Topic: Taxation and estate planning
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Analyze
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
103) Will Jones has created a will that leaves everything to his wife except an exemption amount of $3 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
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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.
Difficulty: 1 Easy
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
107) Benjamin Barry has been named by Katie 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
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
108) Hugh Bowers 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
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
109) Lucy Kelson has been selected to manage the property under a trust agreement for 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
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 2 Medium
Topic: Beneficiaries and claims to property
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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.
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
112) If you establish a(n) ________ 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
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
113) If you establish a(n) ________ trust, you cannot change its terms or end it.
A) irrevocable
B) revocable
C) living
D) self-declaration
E) testamentary
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
114) A(n) ________ 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
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
115) A trust established by your will that becomes effective upon your death is called a(n) ________ trust.
A) testamentary
B) living
C) revocable
D) life
E) insurance
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 2 Medium
Topic: Beneficiaries and claims to property; Estate property, titles, and implications
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 3 Hard
Topic: Beneficiaries and claims to property; Estate property, titles, and implications
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
118) A newly practicing surgeon, who will soon finish paying off his college loans, might want to set up a(n):
A) credit-shelter trust.
B) marital-deduction trust.
C) living trust.
D) inter vivos trust.
E) disclaimer trust.
Difficulty: 3 Hard
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Analyze
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 3 Hard
Topic: Beneficiaries and claims to property; Estate property, titles, and implications
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
120) Gary Ross 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
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
121) Which of the following would be a benefit of establishing a trust?
A) It can reduce or provide for payment of estate taxes.
B) It can allow you to avoid probate and transfer assets immediately to beneficiaries.
C) It can free you from managing your assets while providing you a regular income.
D) It can ensure that your property serves a desired purpose after you die.
E) A trust can do all of these things.
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
123) A federal tax levied on the value of the inheritance of a deceased person to transmit his or her property and life insurance at death is called a(n) ________ tax.
A) estate income
B) trust income
C) inheritance
D) gift
E) estate
Difficulty: 2 Medium
Topic: Taxation and estate planning
Learning Objective: 19-05 Evaluate the effects of federal and state taxes on estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
124) A tax levied on an heir to receive all or part of the estate and life insurance proceeds of a deceased person is called a(n) ________ tax.
A) estate income
B) trust income
C) inheritance
D) gift
E) estate
Difficulty: 2 Medium
Topic: Taxation and estate planning
Learning Objective: 19-05 Evaluate the effects of federal and state taxes on estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
125) A federal and state tax levied on the privilege of making gifts to others is called a(n) ________ tax.
A) estate income
B) trust income
C) inheritance
D) gift
E) estate
Difficulty: 3 Hard
Topic: Taxation and estate planning
Learning Objective: 19-05 Evaluate the effects of federal and state taxes on estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
126) 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 according to the Tax Cuts and Jobs Act?
A) $5,000
B) $15,000
C) $17,000
D) $20,000
E) $25,000
Difficulty: 2 Medium
Topic: Lifetime giving
Learning Objective: 19-05 Evaluate the effects of federal and state taxes on estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 2 Medium
Topic: Taxation and estate planning
Learning Objective: 19-05 Evaluate the effects of federal and state taxes on estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
128) Gerald Wilkins owns a home worth $300,000, a car worth $15,000, various investments worth $600,000 and other personal assets worth $30,000. He still owes $175,000 on his mortgage and $10,000 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
Explanation: ($300,000+$15,000+$600,000+$30,000) − ($175,000+$10,000+$5,000) = $945,000 − $190,000 = $755,000
Difficulty: 2 Medium
Topic: Taxation and estate planning
Learning Objective: 19-05 Evaluate the effects of federal and state taxes on estate planning.
Bloom's: Apply
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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 do not include which of the following?
A) Living will
B) Health care proxy
C) Letter of last instruction
D) Simple will
E) Durable power of attorney
Difficulty: 2 Medium
Topic: Living wills and other directives
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 1 Easy
Topic: Power of attorney
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 1 Easy
Topic: Living wills and other directives
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 1 Easy
Topic: Estate plans and considerations
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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
Difficulty: 1 Easy
Topic: Estate plans and considerations
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
135) 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(n):
A) letter of last instruction.
B) ethical will.
C) prenuptial agreement.
D) codicil.
E) pourover will.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
136) 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
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
137) Which will leaves everything to the spouse?
A) Traditional marital share will
B) Exemption trust will
C) I love you will
D) Stated dollar amount will
E) Living trust
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
138) Your executor can be which of the following:
A) a family member.
B) a friend.
C) an attorney.
D) an accountant.
E) Your executor can be any of these.
Difficulty: 1 Easy
Topic: Estate plans and considerations
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
139) Which statement is not true about a formal will?
A) It is usually prepared without an attorney's assistance.
B) It may be typed.
C) It may be on a preprinted form.
D) You must sign it in the presence of two witnesses.
E) It must also be signed by the witnesses in your presence.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
140) Which statement is not true about an ethical will?
A) It is used to pass on your values and beliefs to your heirs.
B) It is a legally binding document.
C) It helps with estate planning.
D) It requires earnest self-examination.
E) It is a way to express love and share lessons learned.
Difficulty: 2 Medium
Topic: Living wills and other directives
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
141) Which statement is not true about a letter of last instruction?
A) It is also known as after-death wishes.
B) It should contain details about your funeral arrangements.
C) It should contain names of people to be notified of your death.
D) It is legally enforceable in all states.
E) It should contain information about the location of your bank accounts.
Difficulty: 3 Hard
Topic: Living wills and other directives
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
142) Which of the following is the most practical first step in estate planning?
A) Preparing a will
B) Gathering military service records
C) Obtaining court documents with legal name changes
D) Reviewing automobile registrations
E) Purchasing life insurance
Difficulty: 2 Medium
Topic: Estate plans and considerations; Wills
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
143) 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.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
144) To be valid, a will must:
A) be notarized.
B) be recorded in a court of law.
C) be signed in the presence of two witnesses.
D) be orally stated in front of two witnesses.
E) not name an executor as the court will appoint one.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
145) A standard will costs:
A) $100.
B) between $100 and $200.
C) $250.
D) between $300 and $600.
E) $700.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
146) Which of the following is the creator of a trust?
A) Estate
B) Trustee
C) Grantor
D) Beneficiary
E) Survivor
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
147) 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
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
148) 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
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
149) 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
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
150) Which of the following is not true of a Credit-Shelter trust?
A) It is also known as a residuary trust.
B) It allows $11.18 million (in 2018) of every estate to pass free of federal estate taxes to your spouse.
C) Only an estate of more than $22.36 million is taxable for a married couple.
D) The exemptions allowed by the Tax Cuts and Jobs Act of 2017 never expire.
E) It is also known as a bypass trust.
Difficulty: 3 Hard
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
151) Which of the following states the seller must give you a written statement of your right to cancel a deal within three business days if you buy a living trust in your home or somewhere other than the seller's permanent place of business (say, a hotel seminar)?
A) Better Business Bureau
B) AARP
C) American Bar Association
D) Cooling Off Rule
E) National Consumer Law Center
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
152) Which of the following is true of a Testamentary trust?
A) It does not protect your assets from the probate process.
B) It is valuable for experienced beneficiaries.
C) It becomes effect upon your signature.
D) It is not established by your will.
E) It does not provide the benefit of asset management.
Difficulty: 2 Medium
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
153) Which is not true of wills?
A) The ideal will may depend on the size of your estate.
B) The ideal will may depend on the future appreciation of your estate.
C) The ideal will may depend on inflation.
D) Attorneys today believe that only the simple will is ideal.
E) The ideal will may depend on your age and your spouse's age.
Difficulty: 1 Easy
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
154) A living will that is valid in 42 states can be downloaded from the Aging with Dignity organization and is called:
A) Last Rights
B) Ignore Your Wishes
C) Five Wishes
D) Dying Wishes
E) Right to Life Rights
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
155) There are 10 commandments of making your will listed in this chapter. Describe 5 of these.
1. Work closely with your spouse as you prepare your will. Seek professional help so that your family objectives can be met regardless of who dies first.
2. Write your will to conform with your current wishes. When your circumstances change (e.g., when you retire or move to another state), review your will and, if appropriate, write a new one.
3. Do not choose a beneficiary as a witness. If such a person is called on to validate your will, he or she may not be able to collect an inheritance.
4. If you are remarrying, consider signing a prenuptial agreement to protect your children. If you sign such an agreement before the wedding, you and your intended spouse can legally agree that neither of you will make any claim on the other's estate. The agreement can be revoked later, if you both agree.
5. Consider using percentages rather than dollar amounts when you divide your estate. For example, if you leave $15,000 to a friend and the rest to your spouse, your spouse will suffer if your estate shrinks to $17,000.
6. Both you and your spouse should have a will, and those wills should be separate documents.
7. Be flexible. Don't insist that your heirs keep stock or run a cattle ranch. If you do so, they may suffer if economic conditions change.
8. Sign the original copy of your will and keep it in a safe place; keep an unsigned copy at home for reference.
9. Alter your will by preparing a new will or adding a codicil. Don't change beneficiaries by writing on the will itself; this may invalidate the will.
10. Select an executor or executrix who is both willing and able to carry out the complicated tasks associated with the job.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: manual
156) 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?
• Review the privacy policies and the terms and conditions of each website where you have a presence.
• State how you would like your profile to be handled. You may want to completely cancel your profile or keep it up for friends and family to visit. Some sites allow users to create a memorial profile where other users can still see your profile but can't post anything new.
• Give the social media executor a document that lists all the websites where you have a profile, along with your usernames and passwords.
• State in your will that the online executor should have a copy of your death certificate. The online executor may need this as proof in order for websites to take any actions on your behalf.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: manual
157) What is estate planning and how does your personal situation affect that planning?
Difficulty: 2 Medium
Topic: Estate plans and considerations
Learning Objective: 19-01 Analyze the personal aspects of estate planning.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: manual
158) Explain what a will is and what occurs at your death if you do not have one.
Difficulty: 2 Medium
Topic: Wills
Learning Objective: 19-02 Assess the legal aspects of estate planning.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: manual
159) Describe the four types of wills and which one is best for you.
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.
Today many attorneys believe the exemption trust will is best. However, there is no one ideal will. Which will is best for you depends on factors such as the size of your estate, the future appreciation of your estate, inflation, the respective ages of you and your spouse, cash on hand, and—most important—your objectives.
Difficulty: 2 Medium
Topic: Wills; Types of trusts
Learning Objective: 19-03 Distinguish among various types and formats of wills.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: manual
160) What are the four major federal and state taxes that must be considered in estate planning?
Difficulty: 2 Medium
Topic: Taxation and estate planning
Learning Objective: 19-05 Evaluate the effects of federal and state taxes on estate planning.
Bloom's: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: manual
161) What are some benefits of establishing a trust?
• 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
• Ensure that your property serves a desired purpose after your death.
Difficulty: 1 Easy
Topic: Types of trusts
Learning Objective: 19-04 Appraise various types of trusts and estates.
Bloom's: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: manual