CDA CDA Estate Planning & Post-Divorce Financial Transition 2

Question 1

What is a revocable living trust and what advantage does it offer in post-divorce estate planning?

Accepted Answer

A trust that holds assets during life, avoids probate at death, and can be amended or revoked at any time by the grantor

Answer

A revocable living trust allows assets to pass to beneficiaries without probate and can be amended to remove an ex-spouse as trustee or beneficiary after divorce.

Question 2

If an ex-spouse is named as successor trustee of a revocable living trust, what must the divorced client do?

Accepted Answer

Execute a formal trust amendment naming a new successor trustee per the trust's amendment procedures

Answer

The trust must be formally amended to name a new successor trustee, as divorce alone does not automatically change trust terms in most states.

Question 3

What is the purpose of a healthcare proxy (or healthcare power of attorney) and why is updating it critical after divorce?

Accepted Answer

It designates someone to make medical decisions if you are incapacitated — an ex-spouse in this role could have serious consequences

Answer

A healthcare proxy grants your agent broad authority over medical decisions, and retaining an ex-spouse in that role post-divorce could lead to decisions that conflict with your wishes.

Question 4

What is a 'special needs trust' and when might it be relevant in a divorce involving a disabled child?

Accepted Answer

A trust holding assets for a disabled individual that preserves their eligibility for government benefit programs like Medicaid and SSI

Answer

A special needs trust allows a disabled child to receive assets without disqualifying them from needs-based government benefits such as Medicaid and SSI.

Question 5

After divorce, a client wants to ensure young children inherit their estate rather than a potential future spouse. Which estate planning tool best accomplishes this goal?

Accepted Answer

A testamentary trust created within the will that holds and distributes assets to children at a specified age

Answer

A testamentary trust created in the will can hold assets for minor children managed by a named trustee and distributed on a schedule the client controls.

(CDA) Certified Divorce Advisor Practice Test

(CDA) Certified Divorce Advisor Practice Test

CDA CDA Estate Planning & Post-Divorce Financial Transition 2