Chapter 51

Question 1

Estate Planning

Answer 1

Planning on how to transfer stuff from someone who died in advance

Question 2

Will

Answer 2

An instrument by a testator directing what’s to be done w/ their stuff after death

Question 3

Testator

Answer 3

The person who makes and executes a will

Question 4

Testate

Answer 4

The person who left a will before dying

Question 5

Executor

Answer 5

The person who administers the testator’s state

Question 6

Administrator (In terms of a will)

Answer 6

The person who’s there if the person died w/o a valid will or is the executor can’t serve

Question 7

Interstate

Answer 7

Someone who died w/o a will

Question 8

Interstacy Laws

Answer 8

State statutes that specify how someone’s property will be distributed when they die interstate

Question 9

Interstacy laws aim to…

Answer 9

Carry out the likely intent and wishes of the decedent

Question 10

Interstacy laws assumes that _____ inherits the property

Answer 10

The natural heirs

Question 11

Who takes priority in getting 1st dibs on inheritance?

Answer 11

Grandchildren and parents

Siblings, cousins, aunts and uncles are after

Collateral heirs are last

Question 12

What happens if no heirs exist?

Answer 12

Th property goes to the state

Question 13

Probate

Answer 13

The process of validating a will

Question 14

How can people avoid probate costs?

Answer 14

Will substitutes, like living trusts and life insurance

Question 15

Gifts by will can be…

Answer 15

1. Specific
2. General
3. Residuary

Question 16

Specific gifts

Answer 16

Specifying what property goes to who

Question 17

General gifts

Answer 17

Doesn’t single out a particular item

Question 18

Residuary gifts

Answer 18

Used when you don’t know how much of something is going to someone

They get what’s leftover from specific and general gifts

Question 19

Abatement

Answer 19

People in the will get less stuff than intended if there aren’t enough assets

Question 20

Lapsed Legacies occurs when…

Answer 20

Someone in the will dies before the testator, or before the legacy is payable

Aka failed legacy

Question 21

Power of attorney

Answer 21

Gives someone the authority to act on another’s behalf

Question 22

Health Care power of attorney

Answer 22

A document designating someone the power to choose what type + how much medical treatment on behalf of someone

Question 23

Valid wills must comply w/ statutory formalities, which are designed to…

Answer 23

Ensure that the testator understood the testate’s actions when the will was made

Question 24

The basic requirements for executing a will are…

Answer 24

• Proof of testator’s capacity and intent
• A written document
• The testator’s signature
• The signature of the testator’s witnesses

Question 25

Is it required for testators to give their property to their natural heirs?

Answer 25

No, but their intent to disinherit needs to be clarified

Question 26

The testator can revoke a will by…

Answer 26

Intentionally destroying it, or making a new will

Question 27

Revocation by operation of law occurs when…

Answer 27

Marriage, divorce, or child birth takes place after a will has been executed

Question 28

Revocation via marriage

Answer 28

The new spouse receives a share of the testator’s estate, even if not listed in the will

Question 29

Revocation via divorce

Answer 29

Revokes distribution of a property made under a will to the former spouse

Question 30

Revocation via child birth

Answer 30

Allows a child to receive some of the parent’s estate, even if not in the will

Unless there’s clear intent to disinherit the child

Question 31

Codicil

Answer 31

Eliminates the necessity of making/ fixing a new will

Question 32

How much can a codicil revoke a will?

Answer 32

Either fully or partially

Question 33

Trust

Answer 33

An arrangement that lets someone (the trustee) hold onto something for the benefit of another (the beneficiary)

Question 34

Express trusts are created/declared in…

Answer 34

explicit terms, usually in writing

Question 35

Living trusts are created by…

Answer 35

The grantor (settlor) that’s effective during their lifetime

Question 36

Assets held in a living trust can be..,

Answer 36

Passed into their heirs w/o going thru probate

Question 37

Do express trusts shelters assets from estate taxes?

Answer 37

No, but the grantor can pay income taxes on trust earnings, depending on if the trust is recovable or irrecoverable

Question 38

Revocable trusts

Answer 38

Allows the grantor to do/change what they want with their property until they die

Question 39

Irrevocable trusts

Answer 39

Permanently gives up control of the property to the trustee

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