For Informational Purposes Only - Consult a Licensed Financial Services Advisor or Attorney

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Quiz

1. If you die without a will, who decides what happens to your money?

	The federal government
	Your state government
	A judge in your local probate court.
	Your heirs, who must come to an agreement.

2. You are divorced and remarried. Your divorce agreement does not say anything about the retirement plan you started during your first marriage and you have not looked at it since you divorced. Your will leaves everything to your second spouse. Who gets your retirement plan if you die?

	Spouse number one.
	Spouse number two.
	Each gets half.
	A judge has to decide.

3. You made a will two years ago, when you were living in another state. Will your new state recognize your will if you die?

	Yes.
	No.
	Maybe, depending on your state law.
	It depends on whether your will said you would be moving out-of-state.

4. Who should not sign as a witness to your will?

	Your accountant.
	Your best friend.
	Your lawyer.
	Anyone who is named a beneficiary in your will.

5. Your brother-in-law just died and his will named you executor, but you do not want the responsibility. Are you obligated to do the job?

	No, because anyone can decline to be an executor or a co-executor.
	No, because he is not a blood relative.
	No, because he did not get your permission to name you executor.
	Yes, because his will is a legal document and you are legally bound.

6. Your perfectly sane mother always said that each of her three children would inherit one-third of her estate in her will. She died, but that is not what her will stipulated. She left you $25,000 and the rest of her estate ($300,000) is to be split between your two sisters. If you want to contest her will, which of the following could you not use as legal grounds?

	Claiming your mother was not mentally competent at the time she made the will.
	Claiming that she was pressured and being unduly influenced by your two sisters.
	Claiming that she repeatedly told all of you that you would each inherit the same amount.
	Claiming that she had been given incompetent legal advice.

7. Which of the following is not true of a living trust?

	The assets in it do not have to go through the probate process, saving legal and administrative fees.
	Assets in a living trust are not exempt from federal and state estate taxes.
	Its assets are listed in your court's public record of probate assets.
	If it is a revocable trust, you can dissolve it at any time during your lifetime, and put the assets back in your name.

8. You have already made a valid will but now want to change one of the beneficiaries. Which of the following actions will not allow you to do so?

	Making a new will.
	Having your attorney write a letter stating that you told her you wanted the beneficiary changed.
	Attaching to the will a codicil (addendum) that has been signed and witnessed.

9. In your current will, you listed your two children by name as beneficiaries but didn’t mention any possible or future children. You just had a new baby. What would the baby get if you died?

	Nothing.
	The same as the other two — after all, he is your biological child.
	Depends on applicable state law.
	You executor would decide.

10. You detest your husband and your will reflects that you do not even mention him. If you die, what would he get?

	Nothing.
	All of your estate — he could claim deliberate cruelty or exclusion.
	You can’t disinherit your spouse. He usually would get at least a third.
	The local probate judge would decide.

11. You and your wife could never agree about who should be guardians of your children, so you never named anyone in your will. You want your brother, while she wants her best friend. If you both die, who becomes guardian?

	Whichever of them can prove that the two of you named that person as guardian.
	Your brother, because he is a blood relative.
	The executor makes the decision.
	The probate court makes the decision.

12. Several years ago, you remarried and made a new will. Your two children each will receive a cash bequest of $50,000 plus any extra money in the estate, and your new husband gets your share of the house that you bought together, held as a joint tenancy with the right of survivorship. You die before your husband. Your share of the house is now worth $200,000 and your only other asset is a $15,000 savings account. What do your children get?

	Your children only get what’s left of the $15,000 after probate because, regardless of the amount you wanted your children to receive, the house is deeded to your husband.
	Your husband must sell the house (because half of it is your estate and therefore must be liquidated). He must then give your children their money, plus his share of the appreciation in the house.
	Your spouse must give your children $50,000 each.
	None of the above.

13. You want your will to set up a trust when you die. What do you have to do now?

	Inform the IRS.
	Get a Social Security number for the trust.
	Tell the future trustee.
	None of the above.

14. How much money can one spouse give another at death, before federal estate taxes have to start being paid?

	$100,000.
	$0.
	No federal estate taxes are due on assets given to a spouse at death.
	$600,000.

15. Starting in 1997, the amount of the estate exemption (amount of your estate that can pass tax-free to anyone other than your spouse) will rise each year (from $600,000 in 1997) until the year 2006. In that year, how much will you be allowed to exempt from estate taxes?

	$1.5 million.
	$800,000.
	$2 million.
	$1 million.

16. When you die, all of your tax-deferred retirement plan money is usually hit with income tax for the year of your death. That income tax can be deferred if you name the following as your beneficiary:

	Your spouse.
	Your parents.
	A testamentary trust (a trust that goes into effect upon your death).
	Your children.

17. You own a life insurance policy for $100,000 on your life with your sister as beneficiary. If you die, how much of that $100,000 is included in your estate?

	Depends on the beneficiary.
	None of it.
	All of it.
	Half of it.

18. Your will leaves everything to your sister but you forgot that when you took out your life insurance policy, you named your brother as beneficiary. Who gets the life insurance money?

	Your sister.
	Your brother.
	They each get half.
	The probate judge has to decide.

19. Your father has just given you general power of attorney. What does this mean?

	He has just given you the right to appoint yourself owner of all his assets.
	He has given you the right to make financial decisions and take actions on his behalf, starting now.
	He has given you the right to make financial decisions and take actions on his behalf, but only if he becomes incompetent and cannot do so on his own.
	He has disinherited you, but you have the right to decide who will inherit his money when he dies.

20. Your mother has just given you durable power of attorney. What does this mean?

	She has just given you the right to appoint yourself owner of all her assets.
	She has given you the right to make financial decisions and take actions on her behalf, starting now.
	She has given you the right to make financial decisions and take actions on her behalf, but only if she becomes incompetent and cannot do so on her own.
	She has disinherited you, but you have the right to decide who will inherit her money when she dies.

21. Your friend has just made a living will. What is it?

	A will that lists who is to inherit her property at her death.
	A document that allows the person she has named to write checks from her account to pay medical expenses.
	A document that gives very specific instructions about how she wants her medical care handled at the end of her life and when to stop certain types of care.
	A will that says that no future wills can ever be made.

22. Which is the one piece of information that you do not have to give your children when disclosing details of your estate planning?

	The location of any valuables or documents hidden away to protect against theft.
	Approximately how much money you have and how much you think their inheritance will be.
	The location of lists showing all your account numbers and where property and legal documents are located.
	Location of instructions for your burial service and any personal wishes about distribution of assets.

23. After subtracting any marital deductions your estate is claiming, estate taxes are calculated based on which of the following formulas?

	Your total assets.
	Your total assets, less debts.
	Your total assets, less debts, administrative, legal, and all estate fees.
	Your total assets, less the value of any bequests you have made that were part of the lifetime exclusion amount allowed under estate tax law.

24. Who should always consult a lawyer or professional when preparing a will?

	A person who is unsure who to name as beneficiary.
	A person who plans to name several different people — including non-family members — as beneficiaries.
	A person whose estate exceeds the amount of the federal estate exemption laws.
	A person who plans to include a stinging rebuke of a family member in the will.

25. You need the following documents to have a properly established estate plan, regardless of income:

	A will.
	A will, living will, durable power of attorney and health care proxy.
	A will, living trust, testamentary trust and estate power of attorney.
	None of the above.

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The correct answers are listed below:


Question 1: Correct Answer: Individual state laws dictate who gets what if you die without a will.

Question 2: Correct Answer: Your first spouse gets the retirement plan money. Be glad that you won't be around when spouse No. 2 finds this out.

Question 3: Correct Answer: Many states recognize wills made in other states. But if you moved to or from a community property state from a state that doesn't recognize community property, you need a new will.

Question 4: Correct Answer: If a beneficiary signs as a witness, he’s out of luck — he just gave up his inheritance.

Question 5: Correct Answer: Anyone can decline to be an executor or co-executor. This is why you should always ask in advance.

Question 6: Correct Answer: Claiming that she repeatedly told all of you that you would each inherit the same amount. What someone tells you doesn't matter, except in very extreme cases. It's what's on paper that counts. (The question asked for the answer which would NOT provide legal grounds for overriding "What's on paper", or rather, the will.)

Question 7: Correct Answer: The assets of a living trust are not listed in your court's public records. Many planners believe that this is the biggest misconception people have about living trusts.

Question 8: Correct Answer: Having your attorney write a letter stating that you told her you wanted the beneficiary changed. (Remember the question asked which of the options will NOT allow you to change beneficiaries.) A new will or codicil will allow you to change beneficiaries. To make one or two changes, you don't need the time and expense of drafting and signing a new will. Create a codicil instead.

Question 9: Correct Answer: Omitted children may, in some states, be entitled to what they would inherit if there were no will. In other states, this rule only applies to children born after the will is executed.

Question 10: Correct Answer: You can't disinherit a spouse. You must be divorced. This is to protect the spouse (usually the wife) who has fewer assets from the spouse (usually the husband) who has the majority of assets.

Question 11: Correct Answer: The probate court decides who is the guardian.

Question 12: Correct Answer: Property held as joint tenancy with right of survivorship passes to the survivor outright, regardless of any will provisions.

Question 13: Correct Answer: You don't need to inform the IRS, get a Social Security number for the trust or tell the future trustee until you've actually created the trust.

Question 14: Correct Answer: There is an unlimited marital deduction. However, regular estate tax rules apply when the second spouse dies.

Question 15: Correct Answer: The Taxpayer Relief Act of 1997 set in place a 10-year phase-in period to raise the exemption, culminating at $1 million in 2006.

Question 16: Correct Answer: Your spouse can roll over your retirement plan assets into an IRA, thereby deferring the tax.

Question 17: Correct Answer: If you own it, it's in your estate. But even if you own it, as long as you don't name your estate as beneficiary, life insurance proceeds do escape probate.

Question 18: Correct Answer: Your brother gets the money. Life insurance proceeds go to the beneficiaries who are named, regardless of what the will says.

Question 19: Correct Answer: General power of attorney means that a person can make financial decisions for another person as soon as the documents are certified. Never give anyone a general power of attorney without competent legal advice.

Question 20: Correct Answer: Your mother is allowing you to make her financial decisions for her once she becomes incompetent by signing a durable power of attorney. If your mother can no longer pay bills, write checks, decide where to live or sign a lease, you can do these things for her, but only after she has been declared incompetent and unable to do these things for herself.

Question 21: Correct Answer: A living will provides specific instructions on how a person wants his or her medical care handled. Living wills allow you to control your medical care once you're physically and/or mentally incapable of doing so.

Question 22: Correct Answer: You do not have to tell your children the value of your estate or how much they're going to receive. You should, however, give them all other information about location of your assets.

Question 23: Correct Answer: It includes your total assets, less debts, administrative, legal and estate fees.

Question 24: Correct Answer: A person whose assets are worth more than the amount of the estate exemption should always consult a lawyer.

Question 25: Correct Answer: A properly drawn plan includes a will, living will, durable power of attorney and a health care proxy.