G.56 Estate and incapacity planning documents

Question 1

Jennifer recently discussed her end-of-life wishes with her financial planner. She wants to ensure that her health care preferences are followed should she become diagnosed with a terminal illness or incapacitated in a way that she cannot make decisions for herself. Jennifer’s planner mentioned a document distinct from a Last Will and Testament that does not deal with her property or inheritance. What is the document her planner is referring to?

A) Living Will
B) Revocable Trust
C) Testamentary Trust
D) Power of Attorney for Finances

Answer 1

Living Will

Explanation: A Living Will, also known as an advanced medical directive or health care proxy, outlines an individual’s wishes regarding medical care in the event they become terminally ill or incapacitated and cannot make decisions for themselves. It is distinct from a Last Will and Testament and does not address property or inheritance matters.

G.56 Estate and incapacity planning documents

Question 2

Jasmine has recently completed her estate planning and is discussing various documents with her financial planner, Mark. She mentioned a document she signed that dictates the conditions under which she would decline medical treatments if she stops breathing or if her heart stops. This document can also be integrated with the living will provisions in a durable medical power of attorney. Which of the following is Jasmine referring to?

A) Last Will and Testament
B) Testamentary Trust
C) Medical Directive
D) Durable Financial Power of Attorney

Answer 2

Medical Directive

Explanation: A Medical Directive, sometimes known as a living will, outlines one’s wishes concerning medical treatments in the event they are unable to make decisions for themselves, such as if they stop breathing or their heart stops. This document can be part of the provisions set forth in a durable medical power of attorney but is distinct from documents that deal with financial matters or the distribution of assets after death.

G.56 Estate and incapacity planning documents

Question 3

Samantha recently met with her attorney to update her estate planning documents. She specifically wanted a document that would allow her friend, Elizabeth, to make medical decisions on her behalf should she become unable to express her own wishes. In addition, she’s updating her will to distribute her assets upon her passing. Which of the following best describes the document Samantha needs for Elizabeth to make medical decisions on her behalf?

A) Last Will and Testament
B) Revocable Living Trust
C) Durable Power of Attorney for Finance
D) Medical Power of Attorney

Answer 3

Medical Power of Attorney

**Explanation: **A Medical Power of Attorney grants someone (the agent or attorney-in-fact) the authority to make medical decisions for another person when that person cannot communicate their wishes. It is distinct from a Last Will and Testament, which details how one’s assets should be distributed upon death.

G.56 Estate and incapacity planning documents

Question 4

Catherine recently met with her financial planner to discuss contingency plans in the event she becomes incapacitated and cannot manage her own financial affairs. Which of the following documents will allow her to appoint a trusted individual to handle tasks such as paying her bills, managing investments, and dealing with taxes during her incapacity?

A) Last Will and Testament
B) Health Care Proxy
C) Financial Power of Attorney
D) Living Trust

Answer 4

Financial Power of Attorney

Explanation: A Financial Power of Attorney allows an individual to designate a trusted person to manage all aspects of their financial affairs during a period of incapacity. This can include paying bills, managing investments, handling taxes, and more. It is separate from a Last Will and Testament, which details the distribution of assets after death, and a Health Care Proxy, which pertains to medical decisions. A Living Trust can also provide for financial management, but it doesn’t inherently grant broad powers in case of incapacity like a Financial Power of Attorney does.

G.56 Estate and incapacity planning documents

Question 5

Maria is exploring estate planning tools to ensure that her assets are well-managed both during her lifetime and after her death. She is especially interested in a tool that can help her avoid probate, protect her assets from creditors, and stagger inheritance distributions to her children until they reach ages she deems appropriate. Which of the following best serves Maria’s needs?

A) Last Will and Testament
B) Durable Power of Attorney
C) Revocable Living Trust
D) Health Care Proxy

Answer 5

Revocable Living Trust

Explanation: A Revocable Living Trust allows an individual to transfer title of their assets to a legal entity considered separate from them. This trust can be managed for the benefit of the individual and their family both during their lifetime and after their death. Moreover, it offers advantages such as avoiding the probate process, offering creditor protections for assets held by the trust, and allowing for staggered inheritance distributions based on age or other criteria.

G.56 Estate and incapacity planning documents

Question 6

Jane has been working closely with her financial planner, Thomas, to ensure that her assets are effectively gathered, looked after, preserved, and handed down to her heirs in accordance with her wishes. She wants to take into account any legal requirements, tax implications, and her own personal goals. What process is Jane undertaking?

A) Risk Management
B) Estate Planning
C) Tax Optimization
D) Investment Strategy

Answer 6

Estate Planning

Explanation: Estate Planning encompasses the accumulation, management, conservation, and transfer of wealth while considering legal, tax, and personal objectives. It ensures that one’s wealth is transferred according to their wishes while also potentially minimizing tax implications.

G.56 Estate and incapacity planning documents

Question 7

A person, usually a relative of the deceased, appointed by the probate court to oversee the probate process when an executor is not named in the will.

Answer 7

Administrator

Question 8

Legal document expressing an individual’s last wishes regarding life sustaining treatment

Answer 8

Advance medical Directive/Living Will

Question 9

The probate process conducted in a state other than the state of the decedent’s domicile

Answer 9

Ancillary Probate

Question 10

A clause in a will that identifies the executor and any successor executor. This clause may also define the extent of the executor’s powers and may grant specific or general powers.

Answer 10

Appointment of Executor Clause

Question 11

Witness clause stating that the testator is of sound mind and that he signed the document in the witness’ presense

Answer 11

Attestation Clause

Question 12

Agent or power holder of a power of attorney

Answer 12

Attorney in Fact

Question 13

The clause in a will that directs the distribution of property, whether cash, tangible property, intangible property, or real property.

Answer 13

Bequest Clause

Question 14

Sarah had a will prepared several years ago. Recently, she experienced significant changes in her financial situation and wants to modify certain portions of her will without rewriting the entire document. Which of the following allows Sarah to make these modifications?

A) Testamentary Trust
B) Living Will
C) Codicil
D) Power of Attorney

Answer 14

Codicil

Explanation: A codicil is a document that amends a will. It is prepared subsequent to and separate from the will to modify or explain it.

G.56 Estate and incapacity planning documents

Question 15

A clause in a will that names a secondary person to inherit if the original legatee is deal or disclaims the property.

Answer 15

Contingent Legatee Clause

Question 16

Lisa is reviewing her estate planning documents with her financial planner, Michael. Michael comes across a clause in Lisa’s will that declares this document as her final and ultimate declaration regarding the distribution of her assets upon her death. What is the term commonly used for this clause in a will?

A) Codicil
B) Residuary clause
C) Per stirpes provision
D) Attestation clause
E) Preamble

Answer 16

Preamble

Explanation: A preamble in a will typically states that this is the last will and testament of the testator, nullifying any previous wills or testaments.

G.56 Estate and incapacity planning documents

Question 17

Julia recently reviewed her grandmother’s will and found out that she has been named to receive a beach house upon her grandmother’s passing. What term best describes Julia’s designation in the will?

A) Executor
B) Beneficiary
C) Devisee
D) Trustee

Answer 17

Devisee

Explanation: A “devisee” is a person named in a will to receive real estate. In this scenario, Julia is named to receive the beach house, which is a piece of real estate, making her the devisee.

G.56 Estate and incapacity planning documents

Question 18

An heir or legatee’s refusal to accept a gift or bequest. The disclaimer allows assets to pass to other heirs without additional transfer tax.

Answer 18

Disclaimer Clause

Question 19

Where one lives and intents to remain. The location of one’s primary residence.

Answer 19

Domicile

Question 20

Allows a power of attorney to survive incapacity and/or disability

Answer 20

Durable Feature

Question 21

A written document enabling one individual, the principal, to designate another person(s) to act as his “attorney in fact”. A durable power of attorney survives the incapacity and/or disability of the principal.

Answer 21

Durable Power of Attorney Issued for Health Care or For Property.

Question 22

The reversion of an heirless intestate decedent’s property to the state

Answer 22

Escheat

Question 23

Estate representative designated in the will by the decedent. May serve without bond is the bond is waived by the decedent.

Answer 23

Executor

Question 24

Statute that prevents heirs who feloniously participated in the decedent’s death from inheriting via the will or state intestacy laws.

Answer 24

Felonious Homicide Statute

Question 25

A clause in a will which allows the testator to identify an individual(s) to raise any minor children

Answer 25

Guardianship Clause

Question 26

Individuals who are eligible to receive a portion of a decedent's estate under the intestacy law of the state

Answer 26

Heirs

Question 27

Handwritten wills

Answer 27

Holographic will

Question 28

To die without a valid will or to die with a will that does not distribute all properties

Answer 28

Intestacy

Question 29

A clause in a will which identifies the testator

Answer 29

Introductory Clause

Question 30

One will executed by two or more individuals jointly that transfers their common interest in property

Answer 30

Joint Will

Question 31

A person who is named as a beneficiary in a will

Answer 31

Legatee

Question 32

Legal document expressing an individual’s last wishes regarding life sustaining treatment

Answer 32

Living Will/Advance Medical Directive

Question 33

Two or more identical wills that leave all assets to the reciprocal party

Answer 33

Mutual Wills

Question 34

A clause in a will that discourages heirs from contesting the will by substantially decreasing or eliminating bequests to them if they file a formal legal contest to the will

Answer 34

No-Contest Clause

Question 35

Oral will consisting of dying declarations

Answer 35

Nuncupative Will

Question 36

A decedent’s taxable estate is less than the applicable estate tax credit equivalency, usually the result when too many years pass to a surviving spouse

Answer 36

Overqualified

Question 37

Sometimes called “by the head” allows the deceased person’s heirs to move into the generational slot of the deceased heir and inherit accordingly.

Answer 37

Per Capita

Question 38

Directs equal shares to each living member of the same generation.

Answer 38

Per Capita at Each Generation

Question 39

Sometimes called “ taking by representation” directs that the deceased person’s designated share of an estate is transferred to his heirs.

Answer 39

Per Stripes

Question 40

A document, constituting a physician’s order, detailing the types of medical treatments an individual wishes to receive when they are within a year or so of death. Is part of the patient’s medical record, and is used to minimize the potential for medical errors in providing treatment.

Answer 40

Physician Orders for Life Sustaining Treatment (POLST)

Question 41

Legal document that authorizes an agent to act on a principal’s behalf.

Answer 41

Power of Attorney (POE)

Question 42

A special POA designed for a specific purpose.

Answer 42

Power of Attorney for Property

Question 43

The grantor or giver of a POA.

Answer 43

Principal

Question 44

Two or more identical wills that leave all assets to the reciprocal party.

Answer 44

Reciprocal Wills

Question 45

A clause in a will which directs the transfer of a balance of any assets not previously bequeathed or distributed.

Answer 45

Residuary Clause

Question 46

A clause in a will which involves the notary signing a notarized declaration that he/she witnessed the testator and witnesses sign the will

Answer 46

Self Proving Clause

Question 47

Also known as a personal instruction letter, details the testator’s wishes regarding the disposition of tangible possessions (household goods), the disposition of the decedent’s body, and funeral arrangements. Not legally binding, but generally followed.

Answer 47

Side Instruction Letter

Question 48

A clause in a will that establishes a presumption of which person died first in simultaneous death situations

Answer 48

Simultaneous Death Clause

Question 49

The place, generally referring to the state, where property is located.

Answer 49

Situs

Question 50

Referring to a person’s mental capacity.

Answer 50

Sound mind

Question 51

The agent’s power ‘springs” into existence upon some defined event or determination.

Answer 51

Springing power

Question 52

A Will meeting state statutes generally drawn up by an attorney and signed in the presence of witnesses.

Answer 52

Statutory Will

Question 53

A clause in a will requiring that the legatee survive for a specific period in order to inherit under the Will. The bequest will qualify for the marital deduction if the property transfers to the surviving spouse and the time period of this clauseclause is six months or less.

Answer 53

Survivorship Clause

Question 54

Two wills executed by spouses that leave all assets to the other spouse.

Answer 54

Sweetheart Will

Question 55

A clause in a will directing which assets will bear the payment of any debts and estate taxes.

Answer 55

Tax-Appointment Clause

Question 56

When a decedent dies with a valid Will

Answer 56

Testate

Question 57

Writer of a will.

Answer 57

Testator

Question 58

A legal document that provides the testator the opportunity to control the distribution of property, appoint an executor and avoid the state’s intestacy law distribution scheme.

Answer 58

Will

Question 59

This commonly consists of an attorney, a Certified Public Accountant (CPA), a life insurance consultant, perhaps a trust officer, and a financial planner

Answer 59

Estate Planning Team

Question 60

John gives Allison the power to appoint the $500,000 in his bank account to herself or her mother. John has given Allison a general power of appointment. If Allison dies while holding the power of appointment, whose gross estate would the $500,000 be included in?

Answer 60

Allison's

Question 61

John gives Allison the power to appoint $500,000 in his bank account to herself or to her mother, but only for educational expenses. Even though Allison can appoint the assets to herself (which would usually create a general power of appointments), she has a limited power of appointment because she is limited by the fact that the assets can only be used for educational purposes. If Allison dies white holding the power, will the $500,000 be included in her gross estate.

Answer 61

No, because it is limited the $500,000 will not be included in her gross estate.

Question 62

The following statements describe what type of power of attorney? - pay my bills or sign my name at a real estate closing. - anything I can do, except This type of power of attorney does not cause inclusion of assets in the agent's gross estate.

Answer 62

Special or limited power of attorney

Question 63

What type of power of attorney do the following statements refer to. - anything I can do without exceptions. Generally, should only be given to a spouse - the power causes inclusion of assets in the agent's gross estate in the event the agent dies before the principal.

Answer 63

General power of attorney

Question 64

What type of power of attorney do the following statements refer to - can be narrow or very broad, but generally limited to an ascertanable standard ( health, education, maintenance, and support- HEMS) - narrow-power to appoint grandad's WWI helmet to any blood relative. - Broad- power to appoint any assets to any blood relative, except for your cousin Fred. - the power does not cause inclusion of assets in the agent's gross estate.

Answer 64

Special/Limited power of attorney

Question 65

What type of power ot attorney do the following statements describe? - ability of the power holder to appoint to themselves their estate, their creditors, or the estate’s creditors. - the power causes inclusion of assets in the agent's gross estate in the event the agent dies before the principal.

Answer 65

General power of attorney.

Question 66

Durable powers of attorneys are irrevocable - true or false

Answer 66

False

Question 67

True or False A power of attorney is generally granted to a relative or person whom an individual would trust making decisions for them if they become incapacitated, disabled, or cannot perform a needed task. A power of attorney does not survive death

Answer 67

True

Question 68

True or False If someone dies holding a general power of attorney over someone else's assets, the agent's gross estate will include the value of the assets under the general power of appointment.

Answer 68

True

Question 69

Which document appoints a surrogate decision-maker for health care?

Answer 69

Durable power of attorney for health care

Question 70

What are the three components of a Physician’s Order for Life Sustaining Treatment (POLST)

Answer 70

POLST is many things, including: A process. Part of advance care planning, which helps you live the best life possible. Conversation. A good talk with your provider about your medical condition, treatment options, and what you want. A medical order form that travels with you (called a POLST form)

Question 71

Who is a POLST for?

Answer 71

POLST gives seriously ill or frail people more specific direction over their health care treatments compared to advance directives and more options than Do Not Resuscitate (DNR) orders.