CEA Trusts & Probate Administration 2

Question 1

What is the primary purpose of a pour-over will in estate planning?

Accepted Answer

To transfer assets not already in a trust into the trust at death

Answer

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.

Question 2

In probate administration, what does 'Letters Testamentary' authorize an executor to do?

Accepted Answer

Act on behalf of the estate in legal and financial matters

Answer

Letters Testamentary is a court-issued document granting the executor legal authority to manage and administer the estate.

Question 3

Which type of trust is commonly used to hold life insurance proceeds outside of the taxable estate?

Accepted Answer

Irrevocable Life Insurance Trust (ILIT)

Answer

An ILIT owns the life insurance policy, so proceeds are not included in the insured's gross estate for federal estate tax purposes.

Question 4

During probate, what is the correct order for paying claims against an estate?

Accepted Answer

Administrative costs, funeral expenses, taxes, then creditors by priority

Answer

Most states follow a priority order: administration expenses, funeral costs, family allowances, taxes, then unsecured creditors before distributions to beneficiaries.

Question 5

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:

Accepted Answer

Qualified Terminable Interest Property (QTIP) Trust

Answer

A QTIP Trust qualifies for the marital deduction while allowing the grantor to control who ultimately receives the remainder, commonly used in blended families.

(CEA) Certified Estate Advisor Practice Test

(CEA) Certified Estate Advisor Practice Test

CEA Trusts & Probate Administration 2