AEP Estate Planning Fundamentals 2

Question 1

Which document allows an agent to make financial decisions on behalf of a principal even after the principal becomes incapacitated?

Accepted Answer

Durable power of attorney

Answer

A durable power of attorney remains effective upon the principal's incapacity, unlike a standard power of attorney which terminates at incapacity.

Question 2

What is the primary advantage of a revocable living trust over a will in estate planning?

Accepted Answer

Avoidance of probate

Answer

Assets held in a revocable living trust pass directly to beneficiaries without going through the probate process.

Question 3

Under the 2017 Tax Cuts and Jobs Act, what happens to the increased federal estate tax exemption after December 31, 2025?

Accepted Answer

It sunsets and reverts to pre-2018 levels adjusted for inflation

Answer

The TCJA's doubled exemption sunsets after 2025, reverting to approximately $5 million (inflation-adjusted) per person.

Question 4

A testator dies with a will that leaves property to a beneficiary who predeceased the testator. Which doctrine may cause the gift to pass to the deceased beneficiary's descendants instead?

Accepted Answer

Anti-lapse statute

Answer

Anti-lapse statutes in many states save a bequest from lapsing by redirecting it to the deceased beneficiary's descendants.

Question 5

Which type of property ownership includes a right of survivorship that automatically transfers the deceased owner's interest to surviving owners?

Accepted Answer

Joint tenancy

Answer

Joint tenancy includes the right of survivorship, meaning the deceased joint tenant's share passes automatically to surviving joint tenants.

(AEP) Accredited Estate Planner Practice Test

(AEP) Accredited Estate Planner Practice Test

AEP Estate Planning Fundamentals 2