CLA/CP Exam Estate Planning and Probate 3 — Questions and Answers
Question 1: Which type of joint tenancy feature automatically transfers a deceased owner's share to surviving co-owners?
- Tenancy in common
- Tenancy by the entirety
- Right of survivorship (Correct answer)
- Community property right
Correct answer: Right of survivorship
The right of survivorship in joint tenancy causes a deceased co-owner's interest to automatically vest in surviving joint tenants without probate.
Question 2: What is the primary purpose of a spendthrift clause in a trust?
- To limit investment risk
- To prevent beneficiaries from assigning their interest to creditors (Correct answer)
- To restrict trustee compensation
- To delay distributions until age 25
Correct answer: To prevent beneficiaries from assigning their interest to creditors
A spendthrift clause prohibits beneficiaries from voluntarily transferring their interest and shields it from most creditor claims before distribution.
Question 3: Under federal estate tax law, the unlimited marital deduction applies to transfers made to:
- Any family member
- A U.S. citizen spouse (Correct answer)
- A domestic partner
- A qualified trust only
Correct answer: A U.S. citizen spouse
The unlimited marital deduction allows an unlimited amount to pass estate-tax-free to a surviving spouse who is a U.S. citizen.
Question 4: A Qualified Terminable Interest Property (QTIP) trust is most commonly used to:
- Minimize generation-skipping transfer tax
- Provide income to a surviving spouse while controlling remainder beneficiaries (Correct answer)
- Fund charitable bequests
- Shelter business interests from estate tax
Correct answer: Provide income to a surviving spouse while controlling remainder beneficiaries
A QTIP trust qualifies for the marital deduction and provides income to the surviving spouse, but the grantor controls who receives remaining assets at the spouse's death.
Question 5: Which probate procedure is typically available for small estates and eliminates formal court supervision?
- Supervised administration
- Ancillary probate
- Summary administration (Correct answer)
- Intestate proceeding
Correct answer: Summary administration
Summary administration (or small estate affidavit procedures) allows heirs to collect assets without full probate when the estate value falls below a statutory threshold.
Question 6: What distinguishes a specific bequest from a general bequest in a will?
- A specific bequest is only for real property
- A specific bequest identifies a particular item, while a general bequest is paid from estate assets generally (Correct answer)
- A general bequest is tax-free; a specific bequest is not
- A specific bequest requires a codicil to be valid
Correct answer: A specific bequest identifies a particular item, while a general bequest is paid from estate assets generally
A specific bequest identifies an exact asset (e.g., 'my 2020 Rolex watch'), while a general bequest directs payment of a sum or asset type from the estate at large.
Question 7: What is the legal effect of ademption in estate law?
- A gift is increased by inflation
- A specific gift fails because the property no longer exists in the estate at death (Correct answer)
- Debts are forgiven upon the testator's death
- A bequest merges with the residuary estate
Correct answer: A specific gift fails because the property no longer exists in the estate at death
Ademption occurs when a specifically bequeathed item is no longer part of the estate at death, causing the gift to fail and the beneficiary to receive nothing.
CLA/CP Exam Estate Planning and Probate 3
Which type of joint tenancy feature automatically transfers a deceased owner's share to surviving co-owners?