CES CES Estate Settlement & Probate Process 1 — Questions and Answers
Question 1: Which document formally authorizes a personal representative to collect assets, pay debts, and distribute a decedent's estate?
- Letters testamentary (Correct answer)
- Certificate of trust
- Power of attorney
- Deed of trust
Correct answer: Letters testamentary
Letters testamentary are issued by the probate court and grant the executor legal authority to administer the decedent's probate estate.
Question 2: What is the primary advantage of a funded revocable living trust over a will in terms of estate settlement?
- It reduces the decedent's income taxes during life
- It avoids probate, allowing assets to pass privately and quickly (Correct answer)
- It eliminates the need for an estate tax return
- It protects assets from creditors during the grantor's life
Correct answer: It avoids probate, allowing assets to pass privately and quickly
Assets held in a funded revocable living trust pass directly to beneficiaries without probate, reducing delays, costs, and public disclosure.
Question 3: During estate settlement, what is the order of priority for paying claims against a decedent's estate?
- Unsecured creditors, then taxes, then administration expenses
- Administration expenses, then taxes, then secured and unsecured creditors (Correct answer)
- Beneficiaries first, then creditors, then taxes
- Taxes first, then beneficiaries, then administration expenses
Correct answer: Administration expenses, then taxes, then secured and unsecured creditors
Most states prioritize administration expenses and funeral costs, then taxes, then secured and unsecured creditor claims before distribution to beneficiaries.
Question 4: What is 'abatement' in the context of estate settlement?
- The process of identifying and valuing estate assets
- The reduction or elimination of bequests when estate assets are insufficient to satisfy all gifts and debts (Correct answer)
- The transfer of real property to heirs without probate
- The court approval of the executor's final accounting
Correct answer: The reduction or elimination of bequests when estate assets are insufficient to satisfy all gifts and debts
Abatement occurs when estate assets are insufficient to pay debts and make all bequests, causing gifts to be reduced or eliminated in a statutory order of priority.
Question 5: Which type of jointly held property passes outside of probate to the surviving co-owner by operation of law?
- Tenancy in common
- Tenancy in severalty
- Joint tenancy with right of survivorship (Correct answer)
- Community property without survivorship
Correct answer: Joint tenancy with right of survivorship
Joint tenancy with right of survivorship automatically transfers the deceased owner's interest to the surviving joint tenant without going through probate.
Question 6: What is an ancillary probate proceeding, and when is it required?
- A second probate required when a beneficiary is a minor
- A separate probate proceeding in a state where the decedent owned real property outside their domicile state (Correct answer)
- A probate required when a will is contested
- A simplified probate for estates under a threshold amount
Correct answer: A separate probate proceeding in a state where the decedent owned real property outside their domicile state
Ancillary probate is required in states other than the decedent's domicile when the decedent owned real property there, because real property is governed by the law of the state where it is located.
CES CES Estate Settlement & Probate Process 1
Which document formally authorizes a personal representative to collect assets, pay debts, and distribute a decedent's estate?