Estate Planning Chapter 15 Quiz
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Questions and Answers

Match the following estate planning terms with their definitions:

Beneficiary = Person entitled to receive benefits from a trust or will Executor = Person appointed to carry out the terms of a will Grantor = Individual who creates a trust Trustee = Person or institution that manages a trust

Match the following types of trusts with their characteristics:

Revocable Trust = Can be altered or revoked by the grantor Irrevocable Trust = Cannot be easily altered once established Charitable Remainder Trust = Provides income to the donor and then donates remaining assets to charity Bypass Trust = Allows the surviving spouse to access assets while avoiding estate tax

Match the following property ownership types with their descriptions:

Joint Tenancy with Right of Survivorship = Ownership where if one owner dies, the other inherits their share Tenancy in Common = Ownership where each party holds a distinct share that can be sold or passed on Tenancy by the Entirety = Joint ownership available only to married couples with rights of survivorship Separate Property = Property owned by one spouse that is not subject to division in divorce

Match the following powers of attorney with their functions:

<p>Durable Power of Attorney = Remains in effect even if the principal becomes incapacitated Medical Power of Attorney = Grants authority to make health care decisions on behalf of the principal Springing Power of Attorney = Takes effect only under specified conditions, such as incapacity Power of Attorney = General designation allowing someone to act on another's behalf</p> Signup and view all the answers

Match the following terms related to wills and estate settlement:

<p>Bequest = A gift made through a will Probate = The legal process of administering a deceased person's estate Letter of Instruction = A document that provides guidance for the executor about the deceased's wishes Intestate = Describes a person who dies without a will</p> Signup and view all the answers

Match the following estate planning roles with their responsibilities:

<p>Executor = Administers the estate of a deceased person Trustee = Manages the assets held in a trust Guardian = Responsible for the care of a minor child Grantor = Creates a trust for asset management</p> Signup and view all the answers

Match the following types of trusts with their functions:

<p>Irrevocable trust = Cannot be modified after creation Charitable remainder trust = Provides income to the grantor and donates the remainder to charity Living trust = Used during the grantor's lifetime to manage properties Testamentary trust = Created through a will and comes into effect after death</p> Signup and view all the answers

Match the following terms related to property ownership with their descriptions:

<p>Joint tenancy with right of survivorship = Ownership where the surviving owner inherits the deceased owner's share Tenancy in common = Ownership where each party can own a different percentage of the property Tenancy by the entirety = Ownership limited to married couples with right of survivorship Separate property = Property owned individually, not shared with a spouse</p> Signup and view all the answers

Match the following types of powers of attorney with their specific purpose:

<p>Durable power of attorney = Remains effective even if the grantor becomes incapacitated Medical power of attorney = Authorizes someone to make health care decisions for another Springing power of attorney = Becomes effective only under specified conditions General power of attorney = Grants broad powers to act on behalf of the principal</p> Signup and view all the answers

Match the following estate planning documents with their functions:

<p>Will = Specifies the distribution of assets after death Letter of instruction = Provides guidance on personal wishes and funeral arrangements Bequest = A specific gift of property left in a will Probate = The legal process of settling an estate and distributing assets</p> Signup and view all the answers

Match the following estate planning roles with their responsibilities:

<p>Executor = Administers the estate Trustee = Manages a trust Guardian = Cares for minor children Grantor = Creates the trust</p> Signup and view all the answers

Match the following types of trusts with their specific attributes:

<p>Irrevocable trust = Cannot be changed once established Revocable trust = Can be modified or revoked by the grantor Charitable lead trust = Provides payments to charity first Testamentary trust = Established through a will</p> Signup and view all the answers

Match the following terms related to property ownership with their descriptions:

<p>Joint tenancy with right of survivorship = Surviving owners automatically inherit the share Tenancy in common = Ownership shares can be unequal Tenancy by the entirety = Property owned jointly by married couples Separate property = Property owned individually, not shared</p> Signup and view all the answers

Match the following legal documents with their purposes:

<p>Will = Distributes assets after death Durable power of attorney = Grants authority to manage affairs if incapacitated Letter of instruction = Provides guidance to the executor Medical power of attorney = Decides healthcare matters when unable to do so</p> Signup and view all the answers

Match the following estate-related concepts with their meanings:

<p>Bequest = Gift made through a will Probate = Legal process for validating a will Intestate = Dying without a will Step-up in basis = Adjusting property value at the time of inheritance</p> Signup and view all the answers

Study Notes

Key Terms in Estate Planning

  • Administrator: Individual appointed by the court to manage and settle an estate without a valid will.
  • Beneficiary: Person or entity designated to receive benefits from a will, trust, or insurance policy.
  • Bequest: A provision in a will that designates the distribution of personal property to beneficiaries.

Trust Types and Concepts

  • Bypass Trust: Also known as a nonmarital or credit shelter trust, this is designed to reduce estate taxes by utilizing the exemption equivalent.
  • Charitable Lead Trust: Provides a charitable organization with income for a specified time before the remainder goes to beneficiaries.
  • Charitable Remainder Trust: Allows the grantor to receive income for a period, after which the remaining assets go to designated charities.
  • Durable Power of Attorney: A legal document authorizing someone to act on another’s behalf in financial or legal matters, even when incapacitated.
  • Executor: A person named in a will to carry out its terms and oversee the estate's administration.
  • Gifts: Transfers of property or assets to individuals or entities without expectation of repayment.

Trust Mechanics

  • Grantor (Trustor): The individual who establishes a trust and transfers assets into it.
  • Guardian: An appointed person responsible for the care of minors or dependents in the event of a parent's death.
  • Intestate: The condition of dying without a valid will, leading to distribution of assets according to state laws.

Trust Variants

  • Irrevocable Trust: A trust that cannot be modified or dissolved without the permission of the beneficiaries once established.
  • Joint Tenancy with Right of Survivorship (JTWROS): Co-ownership of property where the surviving owner automatically inherits the deceased’s share.
  • Letter of Instruction: Non-binding document that provides additional guidance on managing the estate and wishes of the deceased.

Estate Structures

  • Life Estate: A form of ownership where one person has the right to use property during their lifetime, after which it passes to another party.
  • Living Trust: A trust established during the grantor's lifetime, allowing for the management of assets without probate.
  • Marital Property: Assets acquired during marriage that are typically owned jointly and divided upon divorce or death.
  • Medical Power of Attorney: Designates someone to make health care decisions on behalf of another if they are unable to do so.
  • Power of Attorney: A legal document permitting one person to act on another’s behalf in legal or financial matters.

Probate and Inheritance

  • Probate: The legal process through which a deceased person's will is validated, and their estate is distributed.
  • Remainder Person: A beneficiary who receives the remaining trust assets after the initial beneficiary’s interest ends.

Trust Definitions

  • Revocable Trust: A trust that can be altered or revoked by the grantor during their lifetime.
  • Separate Property: Assets owned by one spouse, acquired before or outside of marriage, which are not subject to division upon divorce.

Ownership Structures

  • Springing Power of Attorney: A type of power of attorney that only becomes effective under specified conditions, such as the grantor’s incapacitation.
  • Step-Up in Basis: Adjusts the value of inherited assets to their market value at the time of the owner's death, minimizing capital gains taxes.
  • Tenancy by the Entirety: A form of joint property ownership available only to married couples, providing protection from creditors.
  • Tenancy in Common: A type of property co-ownership where each party has an individual interest that may be sold or bequeathed.
  • Testamentary Trust: A trust created through a will, taking effect after the death of the grantor.

Estate Planning Essentials

  • Trustee: The individual or institution responsible for managing a trust and acting in the beneficiaries' best interests.
  • Unified Credit: A tax credit that offsets federal estate taxes, allowing individuals to transfer a certain amount exempt from taxation.
  • Will: A legal document that outlines how a person’s assets will be distributed after their death, and may also appoint guardians for dependents.

Key Terms in Estate Planning

  • Administrator: Individual appointed by the court to manage and settle an estate without a valid will.
  • Beneficiary: Person or entity designated to receive benefits from a will, trust, or insurance policy.
  • Bequest: A provision in a will that designates the distribution of personal property to beneficiaries.

Trust Types and Concepts

  • Bypass Trust: Also known as a nonmarital or credit shelter trust, this is designed to reduce estate taxes by utilizing the exemption equivalent.
  • Charitable Lead Trust: Provides a charitable organization with income for a specified time before the remainder goes to beneficiaries.
  • Charitable Remainder Trust: Allows the grantor to receive income for a period, after which the remaining assets go to designated charities.
  • Durable Power of Attorney: A legal document authorizing someone to act on another’s behalf in financial or legal matters, even when incapacitated.
  • Executor: A person named in a will to carry out its terms and oversee the estate's administration.
  • Gifts: Transfers of property or assets to individuals or entities without expectation of repayment.

Trust Mechanics

  • Grantor (Trustor): The individual who establishes a trust and transfers assets into it.
  • Guardian: An appointed person responsible for the care of minors or dependents in the event of a parent's death.
  • Intestate: The condition of dying without a valid will, leading to distribution of assets according to state laws.

Trust Variants

  • Irrevocable Trust: A trust that cannot be modified or dissolved without the permission of the beneficiaries once established.
  • Joint Tenancy with Right of Survivorship (JTWROS): Co-ownership of property where the surviving owner automatically inherits the deceased’s share.
  • Letter of Instruction: Non-binding document that provides additional guidance on managing the estate and wishes of the deceased.

Estate Structures

  • Life Estate: A form of ownership where one person has the right to use property during their lifetime, after which it passes to another party.
  • Living Trust: A trust established during the grantor's lifetime, allowing for the management of assets without probate.
  • Marital Property: Assets acquired during marriage that are typically owned jointly and divided upon divorce or death.
  • Medical Power of Attorney: Designates someone to make health care decisions on behalf of another if they are unable to do so.
  • Power of Attorney: A legal document permitting one person to act on another’s behalf in legal or financial matters.

Probate and Inheritance

  • Probate: The legal process through which a deceased person's will is validated, and their estate is distributed.
  • Remainder Person: A beneficiary who receives the remaining trust assets after the initial beneficiary’s interest ends.

Trust Definitions

  • Revocable Trust: A trust that can be altered or revoked by the grantor during their lifetime.
  • Separate Property: Assets owned by one spouse, acquired before or outside of marriage, which are not subject to division upon divorce.

Ownership Structures

  • Springing Power of Attorney: A type of power of attorney that only becomes effective under specified conditions, such as the grantor’s incapacitation.
  • Step-Up in Basis: Adjusts the value of inherited assets to their market value at the time of the owner's death, minimizing capital gains taxes.
  • Tenancy by the Entirety: A form of joint property ownership available only to married couples, providing protection from creditors.
  • Tenancy in Common: A type of property co-ownership where each party has an individual interest that may be sold or bequeathed.
  • Testamentary Trust: A trust created through a will, taking effect after the death of the grantor.

Estate Planning Essentials

  • Trustee: The individual or institution responsible for managing a trust and acting in the beneficiaries' best interests.
  • Unified Credit: A tax credit that offsets federal estate taxes, allowing individuals to transfer a certain amount exempt from taxation.
  • Will: A legal document that outlines how a person’s assets will be distributed after their death, and may also appoint guardians for dependents.

Key Terms in Estate Planning

  • Administrator: Individual appointed by the court to manage and settle an estate without a valid will.
  • Beneficiary: Person or entity designated to receive benefits from a will, trust, or insurance policy.
  • Bequest: A provision in a will that designates the distribution of personal property to beneficiaries.

Trust Types and Concepts

  • Bypass Trust: Also known as a nonmarital or credit shelter trust, this is designed to reduce estate taxes by utilizing the exemption equivalent.
  • Charitable Lead Trust: Provides a charitable organization with income for a specified time before the remainder goes to beneficiaries.
  • Charitable Remainder Trust: Allows the grantor to receive income for a period, after which the remaining assets go to designated charities.
  • Durable Power of Attorney: A legal document authorizing someone to act on another’s behalf in financial or legal matters, even when incapacitated.
  • Executor: A person named in a will to carry out its terms and oversee the estate's administration.
  • Gifts: Transfers of property or assets to individuals or entities without expectation of repayment.

Trust Mechanics

  • Grantor (Trustor): The individual who establishes a trust and transfers assets into it.
  • Guardian: An appointed person responsible for the care of minors or dependents in the event of a parent's death.
  • Intestate: The condition of dying without a valid will, leading to distribution of assets according to state laws.

Trust Variants

  • Irrevocable Trust: A trust that cannot be modified or dissolved without the permission of the beneficiaries once established.
  • Joint Tenancy with Right of Survivorship (JTWROS): Co-ownership of property where the surviving owner automatically inherits the deceased’s share.
  • Letter of Instruction: Non-binding document that provides additional guidance on managing the estate and wishes of the deceased.

Estate Structures

  • Life Estate: A form of ownership where one person has the right to use property during their lifetime, after which it passes to another party.
  • Living Trust: A trust established during the grantor's lifetime, allowing for the management of assets without probate.
  • Marital Property: Assets acquired during marriage that are typically owned jointly and divided upon divorce or death.
  • Medical Power of Attorney: Designates someone to make health care decisions on behalf of another if they are unable to do so.
  • Power of Attorney: A legal document permitting one person to act on another’s behalf in legal or financial matters.

Probate and Inheritance

  • Probate: The legal process through which a deceased person's will is validated, and their estate is distributed.
  • Remainder Person: A beneficiary who receives the remaining trust assets after the initial beneficiary’s interest ends.

Trust Definitions

  • Revocable Trust: A trust that can be altered or revoked by the grantor during their lifetime.
  • Separate Property: Assets owned by one spouse, acquired before or outside of marriage, which are not subject to division upon divorce.

Ownership Structures

  • Springing Power of Attorney: A type of power of attorney that only becomes effective under specified conditions, such as the grantor’s incapacitation.
  • Step-Up in Basis: Adjusts the value of inherited assets to their market value at the time of the owner's death, minimizing capital gains taxes.
  • Tenancy by the Entirety: A form of joint property ownership available only to married couples, providing protection from creditors.
  • Tenancy in Common: A type of property co-ownership where each party has an individual interest that may be sold or bequeathed.
  • Testamentary Trust: A trust created through a will, taking effect after the death of the grantor.

Estate Planning Essentials

  • Trustee: The individual or institution responsible for managing a trust and acting in the beneficiaries' best interests.
  • Unified Credit: A tax credit that offsets federal estate taxes, allowing individuals to transfer a certain amount exempt from taxation.
  • Will: A legal document that outlines how a person’s assets will be distributed after their death, and may also appoint guardians for dependents.

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Test your knowledge on key concepts from Chapter 15 of estate planning. This quiz covers various topics including trusts, powers of attorney, and roles involved in the estate planning process. Prepare to challenge yourself on terminology and concepts critical for effective estate management.

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