True False (part 3) Flashcards
(100 cards)
1
Q
The marital tax exemption only applies to one surviving spouse. For example, if husband and wife die at the same time, only husband can use the marital exemption.
A
False
2
Q
The Federal Estate Tax is set at 4 million dollars and the Illinois Estate Tax is set at 5.45 million dollars.
A
False
3
Q
Another name for an inter vivos trust is a dynasty trust.
A
False
4
Q
The Estate Tax is a flat 50%.
A
False
5
Q
If husband dies and left his ex-wife as beneficiary on his life insurance policy but leaves the life insurance policy to his son on a post-dated will, the son automatically gets the life insurance proceeds because the will post-dates the life insurance policy.
A
False
6
Q
If your estate is under $100,000, a small estates affidavit can be used.
A
True
7
Q
If a person does not leave a will, the laws of intestacy specific to the state apply.
A
True
8
Q
Banks carry trust departments that can be named as executors and administer estates.
A
True
9
Q
For client’s with large estates, advising them to make lifetime gifts is a way to lessen their estate tax.
A
True
10
Q
If a will is improperly executed, the property of the decedent will be subject to the intestacy statute and possibly probate.
A
True
11
Q
The IRS must rely on the Attorney General in order to remove a trustee from a trust.
A
False
12
Q
Distillation of a trust is the act of taking the funds out of one trust, and putting it into a different trust, as long as the trustee satisfies the needs of the trust.
A
False
13
Q
In a non-general power of appointment, the done can only appoint according to the parameters of the trust.
A
True
14
Q
Ademption is a common law doctrine used in the law of wills to determine what happens when property bequeathed under a will is no longer in the testator’s estate at the time of the testator’s death.
A
True
15
Q
If a will is executed while property is outside the state, it gets probated outside the state of domicile. In order to avoid this for real estate, you may place the property in an “intervivos trust.
A
True
16
Q
There are four elements to Intentional Interference of a Will. They are (1) existence of an expectancy. (2) intentional interference with the expectancy through tortious conduct (3) causation and (4) damages.
A
True
17
Q
A grantor of a trust cannot also be the trustee of the trust.
A
False
18
Q
“Term life insurance” builds up in value and “Whole Life Insurance” does not.
A
False
19
Q
“Domicile” in Probate Court is defined as where the Grantor pays his or her taxes.
A
False
20
Q
One advantage to probate is that if decedent has debts or potential liability, statute of limitations of creditors is one year.
A
False
21
Q
There is no way to avoid probate for land that is located in a different state than where the testator is domiciled.
A
False
22
Q
A post humonus child will not be eligible to inherit from his deceased parent under the law of intestacy.
A
False
23
Q
Children are not entitled to inherit from their parents and therefore, a parent may “disinherit” their child.
A
True
24
Q
Husband married and then named his wife as the beneficiary of his life insurance policy. The policy stated that the husband may change the beneficiary of the life insurance policy by writing to the insurance company, and including the beneficiary, the new beneficiary, and the policy number. Husband and wife get divorced and husband remarries. Husband bequeathed the payment of his life insurance policy to his wife, not his ex-wife. When husband dies, his ex-wife will still receive the payment of the life insurance policy.
A
True
25
A man makes a will and dies. He is now said to die intestate.
False
26
Donald bequeathed to Hilary $1 million in his will. One night, Donald and Hilary were seen leaving a 7-eleven, highly intoxicated, and going to Donald’s hotel room. Donald was found dead the next morning and Hilary was charged with his murder. Hilary was ultimately not convicted. Hilary will still inherit the $1 million from Donald because she was not convicted of the murder.
False
27
The executor carries out the decedents wishes in a will, and the trustee carries out the decedents wishes in a trust.
True
28
The mere threat to engage in a wrongful act is not considered duress.
False
29
A trust is worth $3 million. It contains $1 million in Google stock, $1 million in Facebook stock, and $1 million in Twitter stock. Each stock’s value is increasing. However, the trustee still has a duty to diversify, in order to comply with the Prudent Investor Rule.
True
30
A court may not modify or terminate a trust if such actions will not further the purpose of the trust.
True
31
In Illinois, if two or more beneficiaries die within 120 hours of one another, and no will or other document provides for this situation explicitly, each is considered to have predeceased the other(s).
False
32
In Illinois, you may create a trust for the care of a pet.
True
33
In Illinois, a child conceived through in vitro fertilization will inherit under her father’s will even if she is born two years after his death.
False
34
Illinois recognizes holographic wills.
False
35
In Illinois, a spouse may not recover under his wife’s will if he wrongfully causes her death, even if he is not convicted for her death.
True
36
In Illinois, to be eligible for a small estate affidavit, a decedent’s estate may exceed $200,000.
False
37
Pension plans and real estate are generally a testator’s largest assets.
True
38
A prenuptial agreement is always binding because no consideration is required.
False
39
A beneficiary of a charitable trust generally has standing to sue if the trustees are not acting in accordance with the terms of the trust.
False
40
Two witnesses must be present to revoke a will.
False
41
Testator devises his home “to A for life, then to B.” A has a life estate. B has a reversion.
False, B cannot have a reversion because B is a transferee. B has a vested remainder
42
Generally speaking, the law of the state where the decedent was domiciled at death governs the disposition of personal property and the law of the state where the decedent’s real property is located governs the disposition of real property
True
43
Under the IL Uniform Simultaneous Death Act Sec. 5/3-1 when the title to property or its devolution depends upon priority of death and if the decedents died within 30 days of each other, their assets will be split as if they had both survived.
False. There is not 30 day rule. Under the statute there needs to be no sufficient evidence that the persons have died otherwise than simultaneously.
44
An adopted child can always inherit from adopted parents and the adopted parents’ family members
False there is an exception to this rule: if adopted child after 18 years old AND never lived with adopting parents before turning 18 they CANNOT inherit from lineal or collateral kindred of adopting parent (can still inherit from adopting parent)
45
In Illinois, a posthumous child born 10 months after its father’s death shall receive the same share of an estate as if the child had been born in the decedent's lifetime;
False, the child needs to be in utero at the time of the father’s death, meaning the child needs to be born within 9 months.
46
Every person who is of sound mind and memory has power to bequeath by will the real and personal estate which he has at the time of his death.
False, the person needs to have attained the age of 18
47
As a general rule, the settlor of a charitable trust is the only person/entity that may enforce the trust terms.
False, the Attorney General has standing to enforce the charitable trust’s terms.
48
A trustee does not have to diversify trust investments if the trustee reasonably determines that, because of special circumstances, the purposes of the trust are better served without diversifying.
True
49
The primary benefit of a spendthrift trust is that a beneficiary of a spendthrift trust can voluntarily alienate/transfer her interest, but her creditors can her creditors reach her interest.
False, the beneficiary of a spendthrift trust may not alienate/transfer their interest voluntarily.
50
If a settlor’s charitable purpose becomes illegal, impossible, or impracticable, the court may direct the application of the trust property to another charitable purpose that approximates the settlor’s intention
True: cy pres
51
If the decedent dies testate and in her will names the person who is to carry out the terms of the will and administer the probate estate, such person is called the administrator.
False. If the decedent names a person in the will to carry out the terms of the estate, they are called the executor. An administrator is named by the court to be a personal representative of the estate if a person dies intestate or does not name an executor.
52
If Testator leaves his property to his daughter per stirpes and the daughter predeceases the testator, then the property will pass to the daughter’s husband.
False. Per stirpes means through the root or bloodline. That means the daughter’s property would pass to her children, but not her husband.
53
Testator leaves his property to his descendants in his will. He leaves behind two adopted children. His children will take under the will.
True. An adopted child is treated as a natural child of his adopted parents and is entitled to take under the will or trust of the adoptive parent.
54
In IL, the deceased wrote out her will and signed it. There were no witnesses. This is a valid will and should be probated after her death.
False. Holographic wills are not valid in the state of Illinois.
55
Testator leaves his property to wife in his will. Five years later, they divorce. The ex-wife will no longer take under the will.
True. Divorce revokes any provision in a decedent’s will for the decedent’s divorced spouse.
56
Testator began having insane delusions about Donald Trump and the 2016 election. In her will, she left everything to her daughter. After she died, her son challenged the will and alleged that his Mom lacked capacity due to her insane delusions. The court will hold that testator lacked capacity and the will should not stand.
False. To prevail under an insane illusion, the contestant must show that both the testator labored under an insane delusion and that the will or some part thereof was a product of the insane delusion. If the insane delusion does not affect the dispositions, then the will stands.
57
Testator leaves ½ of her estate to her daughter. Her daughter pre-deceases her. The state has an anti-lapse statute. Her share will do to her daughter.
True. Anti-lapse statutes substitute another beneficiary for the predeceased devisee. If the legatee is a descendant of the testator, and predeceases the testator, the legacy will go to the legatee’s descendants per stirpes.
58
Testator leaves 100 shares of stock to friend. After a stock split, there are now 200 shares. Friend is entitled to the 200 shares of stock.
True. A stock split is a change in form, not substance. A devisee is entitled to additional shares received by the testator as a result of a stock split.
59
Grantor gives X $100,000 to hold in trust. This is a trust.
False. The creation of a trust requires intent by the settlor to create a trust, ascertainable beneficiaries who can enforce the trust, and specific property to be hold in the trust. In this example, there were no ascertainable beneficiaries.
60
A married couple owns a house in joint tenancy. After the death of the wife, the house must be probated for wife to have full ownership.
False. Upon the death of one tenant, the surviving tenant owns the property absolutely. The decedent’s interest vanishes at death. This is a will substitute.
61
Bob finds out his wife cheated on him during the last fifteen years of their marriage. To get back at her for this betrayal Bob writes her out of his will stating “and to my backstabbing and deceitful strumpet of a wife I leave her with her lover and none of my estate.” Assuming Bob’s wife renounced the declaration in the will. Bob’s disinheriting of his wife is valid under Illinois law and justified given her conduct therefore, she gets nothing.
False, Under 755 ILCS 5/2-8 when a spouse renounces a will which disinherits them, they are entitled to either 1/3 or ½ of the entire estate.
62
Jesse when she began working at XYZ law firm was provided a life insurance policy under which she named her spouse as the beneficiary. Three years later, Jesse divorced her spouse and began a relationship with her assistant. Jesse never notified the insurance of the divorce. In her will Jesse left her entire estate and the benefit of the life insurance policy to her assistant. Upon, Jesse’s death her assistant will inherit under the life insurance policy.
False, the contract with the insurance company will be upheld unless there is clear and convincing evidence that Jesse tried to make her assistant the beneficiary under the life insurance policy. In the absence of such evidence, Jesse’s former spouse will benefit from the policy.
63
The legal definition of decanting for estate planning purposes, is used to describe a lawyer filtering out the wishes of their client to determine what should actually be incorporated in a will.
False, decanting is the pouring over of one trust into a new trust because the needs of the beneficiary have changed.
64
Rae is a 25 year old woman living in downtown Chicago. Thinking she was young and had her whole life ahead of her, she did not plan for her untimely death. As such she did not have a medial power of attorney, nor a will. When she was killed by an escaped lion from the Lincoln Park Zoo her vast estate, that she gained from developing a popular dating app, was submitted for probate. She is survived by a brother, three cousins, both parents, and her maternal grandparents. Under Illinois law, her estate will be divided between her brother and her parents.
False, under IL intestacy law if there is no surviving spouse, or decedents, and the parents are alive they will inherit the estate.
65
A special needs trust is a specific type of trust that does not just provide income but instead pays for the care and maintenance of the beneficiary as the trustee sees fit or per the terms of the trust.
True
66
The term “power of attorney” refers to the right of an estate planning attorney to prepare a will or trust.
False, A power of attorney is a legal document that creates an agency relationship in which the agent, called attorney in fact, is given a written authorization to act on behalf of the principal agency relationship in which the agent, called attorney in fact, is given a written authorization to act on behalf of the principal
67
Jackson during his lifetime was a financial wizard in the stock market. To preserve assets for his children he set up a trust listing them as beneficiaries who were entitled to the income, divided equally, once the youngest reached the age of 21. Jackson named his brother, Cam, as the successor trustee. Cam did not have his brother’s investment prowess. After Jackson died Cam invested all of the principal of the trust in a solar energy company his friend ran. The friend ensured Cam it as a sound investment because solar energy was “the way of the future.” Ultimately, the stock plummeted, Jackson’s children then filed a breach of fiduciary duty action against Cam. Jackson’s children will most likely prevail in their suit.
True, a trustee has a fiduciary duty owed to the beneficiaries of a trust to diversify the assets.
68
A lawyer should always attempt to be named as the trustee of a trust he is drafting for a client so that he can also collect trustee fees. This is a lucrative move on the attorney’s part because his legal malpractice insurance will cover the cost of any fiduciary breach as trustee.
False, legal malpractice insurance only covers damages that stem from legal malpractice claims, by acting as a trustee the lawyer is not acting as an attorney.
69
lawyer is not acting as an attorney.
George created an inter vivos trust naming Bank of America and himself as co-trustees. Under the terms of the trust when George passed his wife, Angie, was entitled to the income for her life and the remainder passed equally to the three children they shared, Huey, Dewey, and Louie. Angie had a child from a previous marriage, Daisy, who was not a beneficiary of the trust. After George’s funeral Angie asked for a copy of the trust agreement from Bank of America. The bank refused to supply her with the agreement because prior to his death George told a manager at the bank he did not want his wife to know Daisy was not a beneficiary. The banks refusal to provide Angie with a copy of the trust was valid.
False, a beneficiary of a trust is entitled to request a copy of the trust and an accounting.
70
One benefit of a discretionary trust is that it preserves stability for the beneficiaries, guaranteeing a fixed income.
False, discretionary trust is meant to preserve flexibility. Allowing a trustee to pay out the income according to who of the beneficiaries needs the benefit the most.
71
If a joint tenant dies without a will, the property passes through intestacy.
False, the property passes to the surviving joint tenant.
72
Under illinois intestacy law, if there is a surviving spouse and no descendant of the decedent then ½ of the estate goes to the spouse and ½ to the decedent’s parents.
False, entire estate to surviving spouse.
73
If a gift is made during the lifetime of the decedent to an heir, the value of that gift is subtracted from the heir’s share in the estate.
False, the rule only applied under common law.
74
There is no intelligence requirement for creating a will.
True, but the decedent must be of sound mind.
75
Formalities of a will include channeling, evidentiary, ritual, and bureaucratic functions.
False, they are channeling, evidentiary, ritual, and protective
76
In Illinois, a son and two of the decedent’s friends signed as witnesses to decedent’s will. The son can not inherit under this will without divesting his interest.
False, there need only be two valid witnesses
77
In Illinois, a holographic will is only valid if written entirely in the handwriting of the testator.
False, in Illinois a holographic will is always invalid
78
In Illinois, a codicil to a will is executed in the same manner as a will.
True
79
A trustee of a revocable trust has a fiduciary duty to residuary beneficiaries.
False, a trustee of a revocable trust has a fiduciary duty only to the settlor.
80
To prove undue influence a complainant may show that a business relationship existed between the testator and influencing party.
False. They will prove a confidential relationship.
81
The test for Testamentary Capacity is Capability, not actual knowledge.
True
82
A mutual will is one instrument executed by two persons as the will of both. When one of them dies, the instrument is probated as the decedent’s will. When the other dies, the instrument is again probated as the second decedent.
(F: this is the definition of a Joint will)
83
Illinois recognizes a holographic will as valid.
False
84
Preprinted will forms are entitled to probate as a formal will in compliance with the Wills Act.
False
85
Duress occurs when a donee performs a wrongful act that coerced the donor into making a donative transfer that the donor would not otherwise have made.
True
86
Class gifts cannot be given to the Testator’s neighbors; they can only be given to intended beneficiaries and closely related kin.
False
87
Trustees hold equitable title in the trust, while beneficiaries hold legal title to the trust.
False
88
The Settlor of the Trust is the same name as the Grantor.
True
89
All revocable inter vivos trusts are irrevocable upon the Grantor’s Death.
True
90
The Rule Against Perpetuities does not apply in Illinois, but you can elect for it to apply if you so wish.
True
91
A Power of Attorney is “activated” the day the signer becomes incapacitated and remains active after his death.
False – POA lasts only until the signer’s death
92
A house that is owned by a married couple in joint tenancy is NOT included in a probate estate.
True – the property transfers to the surviving spouse upon the death of the other spouse and does not need to be probated.
93
While most trusts are created by people, they may also be created by courts.
True – constructive trusts
94
A will must be in writing and witnessed while a codicil need only be in writing.
False – codicils must also be witnessed
95
A will can be revoked in a number of ways and, despite the testator’s intent, if the statute is followed to the letter a will be declared destroyed.
False – the testator’s intent is paramount and they must intend the will be invalid and destroyed to be properly revoked
96
Wills are like other contracts and a person must be 21 to enter into one.
False – people under 21 can create a will
97
Creating a living trust will always result in a reduction in the creator’s taxes
False – revocable trusts have no impact on taxes
98
Creating a living trust will not let creditors be able to take my property
False – the assets in a living trust are still deemed to be the grantor’s property
99
A person with a Power of Attorney does not need anything else to be able to access the medical records of the incapacitated person
False – HIPAA laws still in effect
100
A will allows a person to choose who will represent their interests in a will
True – otherwise, a representative will be chosen by the court
