Trusts & Probate Administration Flashcards
7 cards from real CEA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Trusts & Probate Administration flashcards as text
What is the primary purpose of a pour-over will in estate planning?
Answer: To transfer assets not already in a trust into the trust at death
A pour-over will directs any assets not previously transferred into a living trust to 'pour over' into the trust upon the testator's death.
In probate administration, what does 'Letters Testamentary' authorize an executor to do?
Answer: Act on behalf of the estate in legal and financial matters
Letters Testamentary is a court-issued document granting the executor legal authority to manage and administer the estate.
Which type of trust is commonly used to hold life insurance proceeds outside of the taxable estate?
Answer: Irrevocable Life Insurance Trust (ILIT)
An ILIT owns the life insurance policy, so proceeds are not included in the insured's gross estate for federal estate tax purposes.
During probate, what is the correct order for paying claims against an estate?
Answer: Administrative costs, funeral expenses, taxes, then creditors by priority
Most states follow a priority order: administration expenses, funeral costs, family allowances, taxes, then unsecured creditors before distributions to beneficiaries.
A trust that provides income to a surviving spouse and then passes the remainder to children from a prior marriage is best described as a:
Answer: Qualified Terminable Interest Property (QTIP) Trust
A QTIP Trust qualifies for the marital deduction while allowing the grantor to control who ultimately receives the remainder, commonly used in blended families.
What is 'intestate succession'?
Answer: Distribution of assets by state law when someone dies without a valid will
Intestate succession refers to the statutory rules that determine how a decedent's estate is distributed when there is no valid will.
Which document allows a trustee to prove their authority to act on behalf of a trust without revealing the full trust document?
Answer: Certificate of Trust
A Certificate of Trust is a summary document that confirms the trust's existence and the trustee's powers without disclosing confidential terms.