NALA Estate Planning and Probate 3

Question 1

A testamentary trust created in a will becomes irrevocable:

Accepted Answer

Upon the testator's death when the trust is funded

Answer

When the will is executed

Answer

When the court admits the will to probate

Answer

When the trustee accepts the appointment

Question 2

Under federal estate tax law, the marital deduction allows a spouse to transfer:

Accepted Answer

An unlimited amount to a surviving U.S. citizen spouse free of estate tax

Answer

Up to $5 million to a surviving spouse tax-free

Answer

Assets equal to the applicable exclusion amount to a surviving spouse

Answer

Only community property assets to a surviving spouse without tax

Question 3

A 'spendthrift clause' in a trust primarily serves to:

Accepted Answer

Protect the beneficiary's interest from their creditors and from voluntary alienation

Answer

Prevent the trustee from making improvident investments

Answer

Limit distributions to amounts the beneficiary can prudently spend

Answer

Require beneficiaries to provide budgets before receiving distributions

Question 4

Which document formally authorizes a personal representative to act on behalf of a testate estate?

Accepted Answer

Letters testamentary

Answer

Letters of administration

Answer

Affidavit of heirship

Answer

Certificate of trust

Question 5

A 'disclaimer' in estate planning allows a beneficiary to:

Accepted Answer

Refuse to accept an inheritance, causing it to pass as if the disclaimant predeceased

Answer

Challenge the validity of the decedent's will

Answer

Redirect inherited property to a charity of their choice

Answer

Negotiate a larger share of the estate

Question 6

Under the concept of 'per stirpes' distribution, if a child of the testator predeceases the testator leaving two children (grandchildren of the testator), those grandchildren collectively receive:

Accepted Answer

The share their parent would have received, divided equally between them

Answer

Nothing, because they are not named in the will

Answer

An equal share with the surviving children of the testator

Answer

A double share to compensate for the loss of their parent

Question 7

A durable power of attorney for financial matters differs from a regular power of attorney primarily because it:

Accepted Answer

Remains effective even if the principal becomes incapacitated

Answer

Requires court approval before becoming effective

Answer

Can only be used for real estate transactions

Answer

Automatically terminates upon the principal's 70th birthday