Estate Planning Overview and Will Types

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the primary purpose of a will?

To appoint an administrator if dying intestate

To describe how assets should be distributed after death (correct)

To minimize estate probate fees

To pay off all debts before distribution

Which of the following types of wills requires the presence of a notary?

Holograph Will

Testamentary Trust

Notarial Will (correct)

English Form Will

Who is responsible for carrying out the instructions of a will?

Executor (correct)

Administrator

Trustee

Beneficiary

In the event that a person dies without a will, what is the court's role?

To appoint an administrator to distribute the estate as per provincial laws Signup and view all the answers

What does the term 'preferential share' refer to in estate planning?

The portion of estate assets distributed to the surviving spouse before other beneficiaries Signup and view all the answers

What is a bequest in the context of a will?

A gift resulting from the directives of a will Signup and view all the answers

Which of the following best describes a holograph will?

A type of will that is solely handwritten with no witness required Signup and view all the answers

What role does a trustee play in estate planning?

To oversee the management of assets held in trust for beneficiaries Signup and view all the answers

What is the purpose of a Letter of Last Instruction?

To detail the funeral arrangements and key financial document locations. Signup and view all the answers

Which statement about a codicil is true?

It specifies changes to an existing will. Signup and view all the answers

What is a primary characteristic of Joint Tenancy with Rights of Survivorship (JTWROS)?

It guarantees that assets will transfer directly to surviving owners. Signup and view all the answers

Which type of trust can be dissolved or altered by the settlor at any time?

Revocable Inter Vivos Trust Signup and view all the answers

What defines a Testamentary Trust?

It takes effect only after the settlor's death. Signup and view all the answers

Which of the following describes a General Power of Attorney?

It grants broad powers to make any decisions on behalf of the granter. Signup and view all the answers

Which type of power of attorney remains effective even if the granter becomes mentally incapacitated?

Durable Power of Attorney for Health Care Signup and view all the answers

What is an Alter Ego Trust designed to achieve?

Deferral of capital gains tax on assets. Signup and view all the answers

What does 'Residue' refer to in estate planning?

The amount left after settling debts and obligations. Signup and view all the answers

In what situation would a Contingent Beneficiary receive benefits?

When the primary beneficiary is unable to claim the benefits. Signup and view all the answers

How is income from a Testamentary Trust taxed?

It is taxed at the same rate as individual taxpayers. Signup and view all the answers

What happens to a Limited (non-continuing) Power of Attorney once the granter returns from being away?

It automatically expires. Signup and view all the answers

Which type of trust can provide income for the settlor but cannot be altered once created?

Irrevocable Inter Vivos Trust Signup and view all the answers

Study Notes

Estate Planning Overview

Estate: Assets of a deceased person after debt payment, distributed according to will or law.
Estate Planning: Planning the allocation of wealth before or upon death.
Will: Legal document detailing estate distribution upon death.
Beneficiary: Person(s) receiving estate assets per will (heir). Also, life insurance recipient.
Executor: Individual in a will to pay debts and distribute assets.
Intestate: Dying without a will; estate distributed by provincial law.
Administrator: Court-appointed person to manage an intestate estate.
Preferential Share: Portion of assets first distributed to a surviving spouse.

Will Types

English Form Will: A will signed by the testator and two witnesses.
Notarial Will: Formal will, common in Quebec, completed with a notary (lawyer).
Holographic Will: Entirely handwritten will by the testator, not always recognized.

Will Components

Trustee: Individual or organization managing trust funds for beneficiaries.
Bequest: Gift within a will, no limit to the number.
Residue: Remaining assets after debts, expenses, taxes, and bequests.
Letter of Last Instruction: Supplement outlining funeral arrangements, location of documents.
Codicil: Document changing an existing will.
Probate: Legal process validating a will and asset distribution.
Rights or Things: Income owed to the deceased (e.g., bond coupons).

Estate Planning Strategies

Joint Tenancy with Rights of Survivorship (JTWROS): Joint ownership, surviving owner receives assets directly, avoiding probate.
Contingent Beneficiary: Receives benefits if primary beneficiary is unable to.
Trust: Settlor transfers assets to a trustee for beneficiaries.
Settlor: Person creating a trust.
Inter Vivos Trust: Trust established while alive.
Revocable Inter Vivos Trust: Can be changed/terminated while living, assets remain owner's property.
Irrevocable Inter Vivos Trust: Cannot be changed, assets legally transferred.
Alter Ego Trust: Assets not subject to immediate disposition, deferring capital gains taxes.
Testamentary Trust: Trust created by a will, used for dependents, similar income taxation to individuals.

Other Estate Planning Aspects

Living Will (Advanced Care Directive): Specifies preferences for medical care if incapacitated.
Limited Power of Attorney: Grants specific decision-making power for a limited time/task.
General Power of Attorney: Broad decision-making power while the individual is capable.
Enduring Power of Attorney: Decision-making power, even during incapacity.
Durable Power of Attorney for Health Care: Designates a person to make health care decisions if incapacitated.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

This quiz covers the fundamental concepts of estate planning, including definitions of terms like will, beneficiary, and executor. It also explores different types of wills and their components, including examples such as the English form will, notarial will, and holographic will. Test your knowledge on how to manage and plan the distribution of assets effectively.