Documentation & Legal Requirements Flashcards

When a decedent dies intestate (without a will), which document issued by a probate court authorizes an administrator to manage the estate?

Answer: Letters of Administration

Letters of Administration are issued by the probate court to authorize an administrator to act on behalf of an intestate decedent's estate.

Which provision in a trust agreement gives the trustee discretion to spray or sprinkle income or principal among a class of beneficiaries based on their needs?

Answer: Discretionary distribution provision

A discretionary distribution provision authorizes the trustee to determine the timing, amount, and recipient of distributions among a class of beneficiaries without a fixed formula.

Form 706 for a large taxable estate is initially due how many months after the decedent's date of death?

Answer: 9 months

Federal estate tax returns (Form 706) are due nine months after the decedent's date of death, with a possible six-month extension available upon request.

A trustee is preparing a trust accounting for beneficiaries. Which accounting standard framework is most commonly referenced for fiduciary accounting in the United States?

Answer: Uniform Fiduciary Income and Principal Act (UFIPA)

The Uniform Fiduciary Income and Principal Act (UFIPA), and its predecessor UPIA, provides the framework for allocating receipts and disbursements between income and principal in trust accountings.

A trust document's 'no-contest clause' (in terrorem clause) is designed to discourage what action?

Answer: Beneficiaries contesting the validity of the trust in court

A no-contest or in terrorem clause provides that a beneficiary who challenges the trust's validity will forfeit their interest, discouraging litigation against the estate plan.

Which IRS election allows an executor to value a decedent's gross estate assets as of a date six months after death rather than the date of death?

Answer: IRC Section 2032 Alternate Valuation Date election

The IRC Section 2032 alternate valuation date election allows an executor to value estate assets six months after death if doing so decreases both the gross estate value and the estate tax liability.

What is required for a trust to qualify as a 'designated beneficiary' of an IRA for purposes of the post-SECURE Act required minimum distribution rules?

Answer: The trust must be a valid trust, irrevocable at death, with identifiable individuals as beneficiaries, and the trustee must provide the IRA custodian with trust documentation

For a trust to be treated as a designated beneficiary of an IRA, it must be a valid trust that is irrevocable at the owner's death, have identifiable individual beneficiaries, and the trustee must provide required documentation to the IRA custodian by October 31 of the year following death.