CDA Estate Planning & Post-Divorce Financial Transition Flashcards
6 cards from real CDA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CDA Estate Planning & Post-Divorce Financial Transition flashcards as text
What is a revocable living trust and what advantage does it offer in post-divorce estate planning?
Answer: A trust that holds assets during life, avoids probate at death, and can be amended or revoked at any time by the grantor
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.
If an ex-spouse is named as successor trustee of a revocable living trust, what must the divorced client do?
Answer: Execute a formal trust amendment naming a new successor trustee per the trust's amendment procedures
The trust must be formally amended to name a new successor trustee, as divorce alone does not automatically change trust terms in most states.
What is the purpose of a healthcare proxy (or healthcare power of attorney) and why is updating it critical after divorce?
Answer: It designates someone to make medical decisions if you are incapacitated — an ex-spouse in this role could have serious consequences
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.
What is a 'special needs trust' and when might it be relevant in a divorce involving a disabled child?
Answer: A trust holding assets for a disabled individual that preserves their eligibility for government benefit programs like Medicaid and SSI
A special needs trust allows a disabled child to receive assets without disqualifying them from needs-based government benefits such as Medicaid and SSI.
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?
Answer: A testamentary trust created within the will that holds and distributes assets to children at a specified age
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.
In post-divorce estate planning for blended families, what is a QTIP trust (Qualified Terminable Interest Property Trust)?
Answer: A trust that provides income to a surviving spouse while preserving the principal for children from a prior marriage
A QTIP trust is often used in blended family situations to provide income to a surviving spouse while ensuring the principal ultimately passes to children from a prior marriage.