Free CFC Estate Planning Questions and Answers
Which tax is specifically associated with the transfer of assets from a deceased person to their heirs?
The estate tax is levied on the transfer of the estate of a deceased person to their heirs.
What is the role of an executor in estate planning?
The executor is responsible for ensuring that the assets of the estate are distributed according to the terms of the will.
What is the purpose of a durable power of attorney in estate planning?
A durable power of attorney grants someone the authority to manage the financial affairs of the person if they become incapacitated.
Which document allows an individual to specify their wishes regarding medical treatment if they become incapacitated?
A living will allows an individual to outline their preferences for medical treatment if they are unable to make decisions for themselves.
What is the primary goal of estate planning?
The primary goal of estate planning is to ensure that a person's assets are distributed according to their wishes, as efficiently and cost-effectively as possible.
How can life insurance be used in estate planning?
Life insurance can provide the necessary funds to cover estate taxes and other expenses, ensuring that other assets do not have to be sold.
Which of the following is NOT typically included in an estate plan?
While a financial audit can be beneficial, it is not typically included in an estate plan, which usually includes documents like wills, trusts, and powers of attorney.
What is a common method for reducing estate taxes?
Gifting assets during the grantor’s lifetime can reduce the taxable estate and thus reduce estate taxes.
Which type of trust can be changed or revoked by the grantor during their lifetime?
A revocable trust can be altered or revoked by the grantor during their lifetime, providing flexibility in managing assets.
What is the main advantage of setting up a revocable living trust?
A revocable living trust allows assets to be transferred to beneficiaries without going through the probate process, which can save time and expenses.
Which legal document specifies how a person's assets should be distributed after their death?
A last will and testament is a legal document that outlines how a person's assets should be distributed after their death.