Estate Planning: Wills, Trusts, and Powers of Attorney

Question 1

Which of the following is NOT an advantage of creating a will?

Accepted Answer

Guaranteeing that assets will be distributed to intended beneficiaries

Answer

Providing明确的指示 for the distribution of assets

Answer

Avoiding probate and reducing legal fees

Answer

Protecting against estate taxes

Question 2

A trust is a legal arrangement in which:

Accepted Answer

A trustee manages assets for the benefit of others

Answer

Assets are transferred to an individual with no legal obligation to distribute them

Answer

A person appoints another to make financial decisions on their behalf

Answer

Property is held in joint ownership by multiple individuals

Question 3

Which type of power of attorney grants authority to make financial decisions?

Accepted Answer

General

Answer

Special

Answer

Durable

Answer

Healthcare

Question 4

The primary purpose of probate is to:

Accepted Answer

Distribute assets according to the will or intestate laws

Answer

Validate the validity of a will and appoint an executor

Answer

Avoid unnecessary legal fees and delays

Answer

Protect creditors' interests

Question 5

A durable power of attorney remains valid even if:

Accepted Answer

The principal becomes incapacitated

Answer

The principal dies

Answer

The agent resigns

Answer

The purpose of the power of attorney is fulfilled

Question 6

The process of administering an estate after the death of a person is known as:

Accepted Answer

Probate

Answer

Executors

Answer

Intestacy

Answer

Inheritance

Question 7

Which of the following is NOT a potential risk associated with estate planning?

Accepted Answer

Increased privacy

Answer

Contesting of wills

Answer

Tax penalties

Answer

Delay in distributing assets

Question 8

What happens when someone dies without a will? Describe the probate process.

Accepted Answer

The state decides how assets are distributed, and the probate court manages the estate, paying debts before distributing assets.

Answer

The closest relative inherits everything without any legal process.

Answer

Handwritten notes can serve as a will, and assets are distributed accordingly.

Answer

Assets are frozen until a will is found, creditors can't make claims, and beneficiaries can sell assets for funeral costs without court approval.

Question 9

In California, which element is NOT required for a will to be legally valid?

Accepted Answer

Notary Public's verification

Answer

Testator's signature

Answer

Two or more witnesses

Answer

Attestation clause

Question 10

In estate planning, which ethical principle should be prioritized?

Accepted Answer

Safeguarding the rights and interests of beneficiaries

Answer

Reducing estate taxes

Answer

Enhancing the estate's overall worth

Answer

Avoiding the probate process

Question 11

What is the primary purpose of creating a will?

Accepted Answer

To distribute your assets after death

Answer

To appoint an Executor for your estate

Answer

To avoid probate

Answer

To protect your children

Question 12

Which type of trust does not fully transfer ownership of assets?

Accepted Answer

Revocable trust

Answer

Irrevocable trust

Answer

Special needs trust

Answer

Testamentary trust

Question 13

What key difference exists between a durable and general power of attorney?

Accepted Answer

A durable power of attorney remains valid even after incapacity, unlike a general power of attorney.

Answer

A general power of attorney deals with financial management, while a durable power of attorney covers only healthcare decisions.

Answer

A durable power of attorney is only valid for a limited time, while a general power of attorney is valid indefinitely.

Answer

There is no difference between a durable and general power of attorney.

Question 14

Which of the following is not an advantage of having an estate plan?

Accepted Answer

Guaranteed growth of your assets

Answer

Reduced risk of disputes and legal battles

Answer

Ensuring your wishes are respected after death

Answer

Potential reduction or avoidance of estate taxes

Question 15

In an estate plan, what is the main responsibility of an Executor?

Accepted Answer

Managing and distributing the deceased's assets

Answer

Creating a will

Answer

Distributing inheritances

Answer

Paying off the deceased's debts

Question 16

What is the full name of the legislation known as HIPAA?

Accepted Answer

Health Insurance Portability and Accountability Act

Answer

Health Information Portability and Accessibility Act

Answer

Healthcare Information Portability and Accountability Act

Answer

Health Information Privacy and Accountability Act

Question 17

What is the purpose of a living will?

Accepted Answer

To express an individual's wishes about end-of-life care

Answer

To appoint an Executor for their estate

Answer

To distribute their assets after death

Answer

To avoid probate

Question 18

When creating an estate plan, which is not a critical consideration?

Accepted Answer

Current economic conditions

Answer

Potential tax implications

Answer

Family relationships

Answer

Personal values

Question 19

Which strategy is ineffective for reducing estate taxes?

Accepted Answer

Holding on to appreciated assets until death

Answer

Establishing a revocable living trust

Answer

Making charitable contributions

Answer

Purchasing life insurance to cover estate taxes

Question 20

What is the legal document that specifies the distribution of assets after death?

Accepted Answer

Will

Answer

Trust

Answer

Power of attorney

Answer

Living will

Question 21

Which type of trust is NOT created during the lifetime of the grantor?

Accepted Answer

Testamentary trust

Answer

Revocable trust

Answer

Irrevocable trust

Answer

Living trust

Question 22

What is the primary purpose of a power of attorney?

Accepted Answer

To allow someone else to make decisions on your behalf if you are unable to

Answer

To transfer ownership of assets to another person

Answer

To create a trust

Answer

To avoid probate

Question 23

What is the legal process of administering an estate after someone dies?

Accepted Answer

Probate

Answer

Distribution

Answer

Intestacy

Answer

Administration

Question 24

What is the key difference between a revocable and an irrevocable trust?

Accepted Answer

A revocable trust can be changed or terminated by the grantor, while an irrevocable trust cannot

Answer

An irrevocable trust provides more tax benefits than a revocable trust

Answer

A revocable trust is more expensive to create than an irrevocable trust

Answer

There is no difference between a revocable and an irrevocable trust

Question 25

Which estate planning tool allows the grantor to keep their assets and personal information private?

Accepted Answer

Trust

Answer

Will

Answer

Limited Liability Company (LLC)

Answer

Hiding assets overseas

Question 26

To legally challenge the validity of a will, which action must be taken?

Accepted Answer

File an objection with the probate court

Answer

Hire a private investigator

Answer

Contact the executor of the estate

Answer

Publish a notice in the newspaper

Question 27

Which legal document outlines your wishes for the distribution of your assets after your death?

Accepted Answer

Will

Answer

Trust

Answer

Power of attorney

Answer

Living will

Question 28

Who should consider developing an estate plan?

Accepted Answer

Individuals with assets

Answer

High net worth individuals only

Answer

Married individuals only

Answer

Individuals with children only

Question 29

Define probate:

Accepted Answer

Process of distributing assets after death

Answer

A type of trust

Answer

A power of attorney

Answer

A will

Question 30

Evaluate the benefits and drawbacks of incorporating a living trust into an estate plan.

Accepted Answer

Advantages: Bypasses probate, ensures privacy, facilitates asset management during incapacity.

Accepted Answer

Disadvantages: Involves setup costs, necessitates ongoing maintenance, may not be appropriate in all scenarios.

Answer

Advantages: Only takes effect after death, necessitates court approval, can be challenged.

Answer

Disadvantages: Lacks tax benefits, can be easily revoked, does not provide asset protection.

Question 31

In estate planning, which legal mechanism provides protection for assets from creditors' claims?

Accepted Answer

Trust

Answer

Will

Answer

Power of Attorney

Answer

Living Will

Question 32

What is the key distinction between a joint tenancy and a tenancy in common?

Accepted Answer

In a joint tenancy, upon the death of one owner, their share automatically passes to the surviving owner(s), while in a tenancy in common, it goes to the deceased owner's heirs.

Answer

Joint tenancies offer greater privacy than tenancies in common.

Answer

Commercial properties typically use tenancies in common, while residential properties usually use joint tenancies.

Question 33

Which legal document outlines how assets will be distributed after one's death?

Accepted Answer

Will

Answer

Trust

Answer

Power of attorney

Answer

Insurance policy

Question 34

What distinguishes a revocable trust from an irrevocable trust?

Accepted Answer

A revocable trust can be modified or terminated by the grantor at any time, while an irrevocable trust cannot.

Answer

An irrevocable trust provides more tax benefits than a revocable trust.

Answer

A revocable trust is typically used for short-term financial planning, while an irrevocable trust is for long-term goals.

Answer

There is no distinction between a revocable and irrevocable trust.

Question 35

What is the primary purpose of a power of attorney for health care?

Accepted Answer

To appoint an individual to make medical decisions on one's behalf if they become unable to do so.

Answer

To grant someone the authority to manage financial affairs.

Answer

To create a living will.

Answer

To distribute assets after death.

Question 36

What is the main difference between probate and non-probate assets?

Accepted Answer

Probate assets go through a court process, while non-probate assets do not.

Answer

Non-probate assets are less valuable than probate assets.

Answer

Probate assets are distributed according to the will, while non-probate assets are not.

Answer

There is no difference between probate and non-probate assets.

Question 37

What is the difference between a testamentary trust and an inter vivos trust?

Accepted Answer

A testamentary trust is established by a will, while an inter vivos trust is created during the grantor's lifetime.

Answer

A testamentary trust offers more tax benefits than an inter vivos trust.

Answer

An inter vivos trust is more complex to create than a testamentary trust.

Answer

There is no difference between a testamentary trust and an inter vivos trust.

Question 38

Which of the following is NOT a primary objective of estate planning?

Accepted Answer

Maximizing investment returns

Answer

Distributing assets according to one's wishes

Answer

Protecting assets from creditors

Answer

Minimizing tax liability

Question 39

What is the essential purpose of a will?

Accepted Answer

To distribute assets as per the wishes of the deceased

Answer

To appoint a legal guardian for minor children

Answer

To establish trusts for the benefit of heirs

Answer

To revoke existing powers of attorney

Question 40

Which type of trust allows the creator to retain control over the assets after they have been transferred?

Accepted Answer

Revocable trust

Answer

Irrevocable trust

Answer

Charitable trust

Answer

Special needs trust

Question 41

What is the significance of a power of attorney for health care?

Accepted Answer

It enables an individual to designate someone to make medical decisions on their behalf if they become incapacitated.

Answer

It absolves healthcare providers from liability for actions taken in accordance with the power of attorney.

Answer

It transfers ownership of all medical assets to the appointed agent.

Answer

It grants the agent the authority to sign legal documents on behalf of the principal.

Question 42

What is the term for the court-supervised process of administering an estate?

Accepted Answer

Probate

Answer

Intestate succession

Answer

Guardianship

Answer

Conservatorship

Question 43

Which of the following is a primary benefit of creating a living will?

Accepted Answer

Ensuring that end-of-life medical treatment preferences are respected

Answer

Avoiding probate costs

Answer

Reducing the likelihood of guardianship or conservatorship

Answer

Distributing assets to heirs more quickly

Question 44

What is the key difference between intestate succession and probate?

Accepted Answer

Intestate succession occurs when a person dies without a will, while probate is the process of administering an estate with a will.

Answer

There is no difference between intestate succession and probate.

Answer

Probate is a legal requirement for all estates, regardless of whether there is a will.

Answer

Intestate succession applies only to estates with substantial assets.

Question 45

A will is a legal document that primarily serves which purpose?

Accepted Answer

Distributes your property after death

Answer

Appoints a guardian for your children

Answer

Provides instructions for your medical care in the event of incapacity

Question 46

Which of the following is a type of trust commonly used in estate planning?

Accepted Answer

Revocable living trust

Answer

Power of attorney

Answer

Health care proxy

Answer

Last will and testament

Question 47

A power of attorney is a legal document that:

Accepted Answer

Authorizes another person to act on your behalf in legal or financial matters

Answer

Appoints a guardian for your children

Answer

Distributes your property after death

Answer

Creates a trust to manage your assets

Question 48

Which of the following is a potential benefit of comprehensive estate planning?

Accepted Answer

Reduced probate costs and expenses

Answer

Increased risk of disputes among heirs

Answer

Delayed distribution of assets to heirs

Answer

Increased tax liability on your estate

Question 49

A living will is a legal document that:

Accepted Answer

Provides instructions for your medical care in the event that you become incapacitated and unable to make decisions for yourself

Answer

Appoints a guardian for your children

Answer

Distributes your property after death

Question 50

A probate court is primarily responsible for:

Accepted Answer

Administering the estate of a deceased person, including the distribution of assets and settlement of debts

Answer

Creating estate plans for individuals

Answer

Appointing guardians for children of the deceased

Answer

Managing trusts on behalf of beneficiaries

Question 51

Estate taxes are levied on:

Accepted Answer

The value of your estate at the time of your death, minus any allowable deductions and exemptions

Answer

The value of your estate at the time of probate

Answer

The value of your estate at the time you create your will

Answer

The value of your estate after debts and expenses are paid