Exam 17: Estate Planning: Saving Your Heirs Money and Headaches

A legal entity in which you control the assets and can receive income, but also have the option to leave or remove assets, is called a(n) ________.

Your estate tax burden can be reduced by giving gifts to your heirs prior to your death. This has the effect of reducing the value of your estate and thus lowering your tax obligation. As of 2011, each spouse can give up to $________ each year to ________.

Which of the following is/are a typical cash need(s) of one's estate?

A will is a legal document that describes how you want your property to be transferred to others.

You know that the advantages of having a will likely outweigh the disadvantages associated with probate. Which is not a disadvantage of probate?

Outline the steps in calculating estate taxes.

A qualified terminable interest property trust gives the individual establishing the trust the ability to direct income from the trust to his or her spouse over the spouse's life, and then, at the spouse's death, to choose to whom the assets go.

The first step in estate planning is to determine the value of your estate.

In most states, community property is recognized and trumps any allocations in your will.

The legal procedure that establishes the validity of a will, and then distributes the assets of the estate including the payment of any taxes, is called ________.

In which kind of trust can you place your assets while still alive?

You are engaging in ________ when you plan for what happens to your accumulated wealth and your dependents after you die, as well as determining decision-making authority should you be physically or mentally impaired.

Which of the following is a requirement of a valid will?

Under ________, ownership passes directly on to the surviving owner or owners, bypassing the will. With ________, when one spouse dies assets become part of the deceased's estate and are distributed through the will.

A ________ gives the individual establishing the trust the ability to direct income from the trust to his or her spouse over the spouse's life, and then to whomever else the individual wants the funds to go.

For someone who dies intestate, or without a valid will, ________ and the applicable state laws allow for the orderly distribution of the estate.

A durable health care power of attorney allows you to designate another person to make life support decisions if you are unable to.

Giving assets away as a gift reduces the value of your estate and allows you to help your heirs while you're still alive.

If you were to create a trust by your will, which becomes active only after you die, then you have created a(n) ________.

The final step in estate planning is determining which estate planning techniques are most appropriate to achieve your goals.