Estate Planning Exam 1 with all Correct & 100% Verified
Answers |Actual Complete Update |Already Graded A+
Estate Planning ✔Correct Answer-The process of accumulation, management, conservation,
and transfer of wealth considering legal, tax, and personal objectives.
Decedent ✔Correct Answer-A deceased person.
Heirs ✔Correct Answer-People who inherit under state intestacy laws.
Legatees ✔Correct Answer-People who inherit under a valid will.
Donor ✔Correct Answer-A person who gives a gift. (Must be competent to make the gift,
must have intent to make a voluntary transfer)
Donee ✔Correct Answer-A person who receives a gift. (Must be competent to receive the gift,
Must take delivery, Must accept the property)
Effective Transfers ✔Correct Answer-A goal of estate planning. When the decedent's assets
are transferred based on his wishes.
Efficient Transfers ✔Correct Answer-A goal of estate planning. When transfer costs are
minimized.
Common Goals and Objectives of Estate Planning ✔Correct Answer--Fulfill the client's transfer
wishes
-Minimize transfer taxes (Income tax issues, gift tax, generation-skipping tax, estate tax, state
inheritance tax)
-Minimize transfer costs (lawyer's fees, accountants fees, costs of documents, court fees,
transfer taxes)
-Maximize net assets to heirs.
-Provide liquidity at death, which is needed to pay for last medical, taxes, and burial costs.
-Fulfill client's health care wishes.
Impediments to Achieving Estate Planning Goals ✔Correct Answer--Unwillingness to face
mortality
-Procrastination
-Current Good Health
-Costs
-Lack of Knowledge
-Lack of awareness of the value of assets.
, Consequences for Failing to Plan ✔Correct Answer--Client's property transfer objectives may
go unfulfilled
-Transfer taxes may be excessive
-Other transfer costs may be excessive
-Client's family may not be properly provided for financially
-There may be insufficient liquidity to cover client's debts, taxes, and costs at death.
Transfer Tax ✔Correct Answer-Up to 40% in 2014.
Common Transfer Objectives ✔Correct Answer--Transfer property to desired beneficiaries
-Minimize taxes, maximize assets to heirs.
-Avoid probate process
-Use lifetime transfers-gifts.
-Meet liquidity needs at death
-Plan for children
-Plan for incapacity of transferor
-Provide for needs of surviving spouse
-Fulfill charitable intentions of tranferor.
Unauthorized Practice of Law ✔Correct Answer-Certain activities (drafting legal documents)
are reserved only for licensed attorneys. Financial planners should refer clients to licensed
attorneys for legal counsel.
American Taxpayer Relief Act of 2012 ✔Correct Answer-Maintains unification of the gift and
estate tax regime, increases the applicable exemption for generation skipping transfer, gift, and
estate taxes to $5,340,000 in 2014 (indexes for inflation), and exacts a 40% maximum transfer
tax rate on excess transfers.
Wills ✔Correct Answer-Legal documents providing the testator (will-maker) the opportunity
to control the distribution of his property at death; a will avoids the state's intestacy law
distribution scheme.
A will may be revoked or amended at any time by the testator as long as... ✔Correct Answer-
The testator has legal capacity.
When is a will effective? ✔Correct Answer-Only upon death of the testator.
Intestacy ✔Correct Answer-The state of a decedent without a valid will that disposes of all the
decedent's property.
Intestacy Succession ✔Correct Answer-A legal distribution scheme provided by the state
legislature for a decedent who dies without a valid or complete will.
Testate ✔Correct Answer-A decedent who has a valid will
Answers |Actual Complete Update |Already Graded A+
Estate Planning ✔Correct Answer-The process of accumulation, management, conservation,
and transfer of wealth considering legal, tax, and personal objectives.
Decedent ✔Correct Answer-A deceased person.
Heirs ✔Correct Answer-People who inherit under state intestacy laws.
Legatees ✔Correct Answer-People who inherit under a valid will.
Donor ✔Correct Answer-A person who gives a gift. (Must be competent to make the gift,
must have intent to make a voluntary transfer)
Donee ✔Correct Answer-A person who receives a gift. (Must be competent to receive the gift,
Must take delivery, Must accept the property)
Effective Transfers ✔Correct Answer-A goal of estate planning. When the decedent's assets
are transferred based on his wishes.
Efficient Transfers ✔Correct Answer-A goal of estate planning. When transfer costs are
minimized.
Common Goals and Objectives of Estate Planning ✔Correct Answer--Fulfill the client's transfer
wishes
-Minimize transfer taxes (Income tax issues, gift tax, generation-skipping tax, estate tax, state
inheritance tax)
-Minimize transfer costs (lawyer's fees, accountants fees, costs of documents, court fees,
transfer taxes)
-Maximize net assets to heirs.
-Provide liquidity at death, which is needed to pay for last medical, taxes, and burial costs.
-Fulfill client's health care wishes.
Impediments to Achieving Estate Planning Goals ✔Correct Answer--Unwillingness to face
mortality
-Procrastination
-Current Good Health
-Costs
-Lack of Knowledge
-Lack of awareness of the value of assets.
, Consequences for Failing to Plan ✔Correct Answer--Client's property transfer objectives may
go unfulfilled
-Transfer taxes may be excessive
-Other transfer costs may be excessive
-Client's family may not be properly provided for financially
-There may be insufficient liquidity to cover client's debts, taxes, and costs at death.
Transfer Tax ✔Correct Answer-Up to 40% in 2014.
Common Transfer Objectives ✔Correct Answer--Transfer property to desired beneficiaries
-Minimize taxes, maximize assets to heirs.
-Avoid probate process
-Use lifetime transfers-gifts.
-Meet liquidity needs at death
-Plan for children
-Plan for incapacity of transferor
-Provide for needs of surviving spouse
-Fulfill charitable intentions of tranferor.
Unauthorized Practice of Law ✔Correct Answer-Certain activities (drafting legal documents)
are reserved only for licensed attorneys. Financial planners should refer clients to licensed
attorneys for legal counsel.
American Taxpayer Relief Act of 2012 ✔Correct Answer-Maintains unification of the gift and
estate tax regime, increases the applicable exemption for generation skipping transfer, gift, and
estate taxes to $5,340,000 in 2014 (indexes for inflation), and exacts a 40% maximum transfer
tax rate on excess transfers.
Wills ✔Correct Answer-Legal documents providing the testator (will-maker) the opportunity
to control the distribution of his property at death; a will avoids the state's intestacy law
distribution scheme.
A will may be revoked or amended at any time by the testator as long as... ✔Correct Answer-
The testator has legal capacity.
When is a will effective? ✔Correct Answer-Only upon death of the testator.
Intestacy ✔Correct Answer-The state of a decedent without a valid will that disposes of all the
decedent's property.
Intestacy Succession ✔Correct Answer-A legal distribution scheme provided by the state
legislature for a decedent who dies without a valid or complete will.
Testate ✔Correct Answer-A decedent who has a valid will
