chp 19 - wills and estates

A simple will creates lower overall taxation.

True or False

False

Your executor can be a family member, a friend, an attorney, an accountant, or the trust department of a bank

True or False

True

Estate planning is only for those with estates valued at an excess of $11.5 million.

True or False

False

An advanced directive is giving someone else the power to make health care decisions if principal is unable to do so—such as in the instance of a mental health crisis

True or False

True

A will is a legal declaration of a person’s ____ as to the disposition of his or her property after death.

A. Family

B. Mind

C. Law

D. Children

B. Mind

All of the following are benefits of trusts, except:

A. Provide income for a surviving family

B. Free you from managing your assets

C. Avoid probate

D. Reduce estate taxes

E. All of the above are benefits

E. All of the above are benefits

Estate planning involves:

A. handling your property while you are alive.

B. dealing with what happens to that property after your death.

C. your family's financial security in the event of your death.

D. your family's financial security in the event of your spouse's death.

E. All of the choices are correct.

E. All of the choices are correct.

If you die without a valid will, you die:

A. as an executor / executrix.

B. intestate.

C. in trust.

D. prenuptially.

B. intestate.

Which will should be written, dated, and signed entirely in your own handwriting?

A. informal will
B. letter of last instruction
C. formal will
D. statutory will
E. holographic will

E. holographic will

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 has a life insurance policy

of $100,000. He still owes $125,000 on his mortgage and $5,000 on a car loan.

What is his net taxable estate?

A. $865,000

B. $890,000

C. $735,000

D. $760,000

E. $860,000

E. $860,000

Your parent has created a will that leaves exactly $2,000,000 to you.

What type of will has your parent created?

A. A simple will

B. A traditional marital share will

C. An exemption trust will

D. A stated dollar amount will

E. None of the choices

D. A stated dollar amount will

A legal document authorizing someone to act on your behalf is called a:

A. codicil.

B. rider.

C. power of attorney.

D. trustor.

E. proxy.

C. power of attorney.

You should review your will if:

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 are good reasons to review your will.

E. All are good reasons to review your will.

For 2024, estates up to $____________ are generally not subject to federal estate taxes.

A. $11,700,000

B. $3,500,000

C. There is no estate tax this year, but heirs do not receive a step up in basis on inherited assets.

D. $7,500,000

E. $13,610,000

E. $13,610,000

Trusts can be

A. Callable or non-callable.

B. Revocable or irrevocable.

C. Participative or non-participative.

E. Cumulative or non-cumulative.

B. Revocable or irrevocable.

What document is generally used to name the guardian of your minor children in the event that both you and your spouse should die?

A. A living trust.

B. A living will.

C. A last will and testament.

D. An insurance trust.

C. A last will and testament.

Which type of trust would be used for young adult children, where the deceased parents wish to ensure that the principal of the trust is maintained for a long period of time?

A. A spendthrift trust

B. A life insurance trust

C. A generation skipping trust

D. A grantor retained annuity trust

A. A spendthrift trust

What happens if you die without a will and there are many close by relatives?

A. Your children become wards of the State.

B. You will avoid probate, but not federal estate taxation.

C. The courts will determine how your assets will be distributed based on state law.

D. Your assets will go to the State.

C. The courts will determine how your assets will be distributed based on state law.

Under Florida law, if you do not name in a living will whom you want to be in charge of your end of life decisions (like pulling the plug), then:

A. The State of Florida will decide.

B. Your oldest sibling will decide.

C. Your spouse will decide if you are married, otherwise your parents will decide.

D. Your doctor will decide.

C. Your spouse will decide if you are married, otherwise your parents will decide.

Which of the following is TRUE with respect to wills?

A. In most states, witnesses can not be heirs.

B. You must date and sign the will.

C. The will must be signed by at least two witnesses (for states that do not allow holographic wills).

D. If your state allows holographic wills, you don't need witnesses (but it is still advisable to have witnesses).

E. All of the answers listed are true.

E. All of the answers listed are true.

A living will or advance health care directive documents your wishes in the event that you become so physically or mentally disabled that you are unable to act on your own.

True or False

True

Your father gives you 100 shares of ABC stock on Dec. 31, 2022 worth $3,500 at the time of the gift. He paid $1,000 for the shares ($10/share) in 1998.

On Dec. 31, 2023, you sell the ABC stock for $4,500 ($45/share).

What is your taxable gain?

A. There is no gain on the sale under current federal gift tax law.

B. A $1,500 long term capital gain.

C. A $4,500 long term capital gain.

D. A $3,500 long term capital gain.

E. A $2,000 long term capital gain.

D. A $3,500 long term capital gain.

For 2024, an individual may gift up to _________ to any individual without having to file a gift tax return.

A. $13,610,000

B. $18,000

C. $16,000

D. $15,000

B. $18,000