TEST 4; Estate Planning questions
with correct answers
Transfer Costs - correct answer ✔✔ The end of life and the costs of transferring your estate can
be high.
1. court costs
2. attorney fees
3. surety bonding
4. accounting/appraisal fees
5. funeral expenses
6. resolving debt
7. estate/inheritance tax (estates above $11,200,000 in 2018)
8. income taxes
What is Estate Planning? - correct answer ✔✔ The process of accumulating, managing, and
disposing of one's property over a lifetime
What is Probate? - correct answer ✔✔ The court supervised legal process which validates the
will as authentic and ensures that the will is executed in accordance with the wishes of the
descendent.
Costs include filing fees, courts costs, appraisals, publication, taxes, attorney and executor fees.
Reasons for Estate Planning - correct answer ✔✔ It is costly to deal with your stuff if you don't
have an estate, this decreases the value of your property
- Conserve Estate: Proper planning is going to make sure that your property is going to be
disposed properly after your death
- Provide for Survivors: You want to be able to provide for the people who outlive you
, Who are you leaving behind?
- Distribute Assets: You want to make sure the estate is distributed in an efficient manner in a
way you approve of
- Minimize Costs
o Estate and Inheritance Taxes ("death taxes") - federal and state estate taxes; state inheritance
tax
o Income Tax: Income with the respect to the decedent: Income taxes for the year of which a
person dies
o Probate Costs: attorney fees, court costs, administration fees, appraisals, etc.
The Six Steps of Estate Planning - correct answer ✔✔ 1. {Set objectives} - who gets what, when
they get it, how they get it
2. {Valuation} - identify and place a value on all that you own
3. {Net for Liabilities} - adjust #2 for debts, taxes and death expenses
4. {Design for Transfer} - select optimum tools (will,trust,etc.)and personnel (executor,
lawyer,etc.)
5. {Implementation} - execute the documents, buy the insurance, hire the lawyer, etc.
6. {Review and Revise} as necessary
Liquidity - correct answer ✔✔ an estate may have great value but may be held in an illiquid
form. To facilitate liquidation, the following may be used:
1. Beneficiary designation - paid immediately; passes outside of probate directly to
beneficiaries
2. Flower bonds - debt instruments which may be redeemed early, upon death of the owner
3. Joint Ownership (Tenancy) with Rights of Survivorship (JTWROS) - surviving owner is free to
transact a sale almost immediately; Transfer On Death (TOD accounts)
4. Transfers prior to death - gifts
Decedent - correct answer ✔✔ the dead guy
with correct answers
Transfer Costs - correct answer ✔✔ The end of life and the costs of transferring your estate can
be high.
1. court costs
2. attorney fees
3. surety bonding
4. accounting/appraisal fees
5. funeral expenses
6. resolving debt
7. estate/inheritance tax (estates above $11,200,000 in 2018)
8. income taxes
What is Estate Planning? - correct answer ✔✔ The process of accumulating, managing, and
disposing of one's property over a lifetime
What is Probate? - correct answer ✔✔ The court supervised legal process which validates the
will as authentic and ensures that the will is executed in accordance with the wishes of the
descendent.
Costs include filing fees, courts costs, appraisals, publication, taxes, attorney and executor fees.
Reasons for Estate Planning - correct answer ✔✔ It is costly to deal with your stuff if you don't
have an estate, this decreases the value of your property
- Conserve Estate: Proper planning is going to make sure that your property is going to be
disposed properly after your death
- Provide for Survivors: You want to be able to provide for the people who outlive you
, Who are you leaving behind?
- Distribute Assets: You want to make sure the estate is distributed in an efficient manner in a
way you approve of
- Minimize Costs
o Estate and Inheritance Taxes ("death taxes") - federal and state estate taxes; state inheritance
tax
o Income Tax: Income with the respect to the decedent: Income taxes for the year of which a
person dies
o Probate Costs: attorney fees, court costs, administration fees, appraisals, etc.
The Six Steps of Estate Planning - correct answer ✔✔ 1. {Set objectives} - who gets what, when
they get it, how they get it
2. {Valuation} - identify and place a value on all that you own
3. {Net for Liabilities} - adjust #2 for debts, taxes and death expenses
4. {Design for Transfer} - select optimum tools (will,trust,etc.)and personnel (executor,
lawyer,etc.)
5. {Implementation} - execute the documents, buy the insurance, hire the lawyer, etc.
6. {Review and Revise} as necessary
Liquidity - correct answer ✔✔ an estate may have great value but may be held in an illiquid
form. To facilitate liquidation, the following may be used:
1. Beneficiary designation - paid immediately; passes outside of probate directly to
beneficiaries
2. Flower bonds - debt instruments which may be redeemed early, upon death of the owner
3. Joint Ownership (Tenancy) with Rights of Survivorship (JTWROS) - surviving owner is free to
transact a sale almost immediately; Transfer On Death (TOD accounts)
4. Transfers prior to death - gifts
Decedent - correct answer ✔✔ the dead guy
