Estate Planning & Wealth Transfer Flashcards

What is a 'pour-over will' used for in estate planning?

Answer: To transfer any probate assets into a living trust at death

A pour-over will directs that any assets not already in the living trust at the time of death be transferred into the trust through probate.

Which beneficiary designation type allows the account to pass to contingent beneficiaries if the primary predeceases the owner?

Answer: Per stirpes

A 'per stirpes' designation means the deceased primary beneficiary's share passes down to their own descendants rather than being split among surviving primary beneficiaries.

What Medicaid planning concept refers to the legally defined period during which transferred assets can still count against eligibility?

Answer: Look-back period

The Medicaid look-back period is 60 months (5 years) during which asset transfers are reviewed and may result in a penalty period of ineligibility.

Which trust type is specifically designed to hold assets for a disabled beneficiary without disqualifying them from government benefits?

Answer: Special needs trust

A special needs trust supplements government benefits for a disabled beneficiary without disqualifying them from Medicaid or SSI.

A Grantor Retained Annuity Trust (GRAT) is most advantageous when:

Answer: The transferred assets are expected to grow faster than the IRS hurdle rate

A GRAT transfers appreciation above the IRS Section 7520 hurdle rate to heirs gift-tax-free, so it works best when assets are expected to significantly outperform.

What is the primary estate planning risk of holding assets solely in joint tenancy with right of survivorship (JTWROS)?

Answer: Assets pass automatically without consideration of the will or trust plan

JTWROS assets pass automatically to the surviving joint tenant, potentially bypassing carefully planned trust or will provisions.