Ch 3: Types of Property Interests

Arnold and Willis agree to purchase a condo at the beach for $200,000 as tenants in common. Willis will contribute $150,000 of the price, and Arnold will contribute the remaining $50,000. They have agreed to split all income and expenses at 75%/25%, the same as their ownership percentages. What is the gift from Willis to Arnold for the year relating to this property? A)$0. B)$50,000. C)$150,000. D)$200,000.

A)$0.

Which of the following is/are considered tangible personal property?1. Stocks.2. Automobile.3. Rental house.4. Land. A)2 only. B)1 and 2. C)3 and 4. D)1, 2, 3, and 4.

A)2 only.

All of the following statements concerning joint tenancy with rights of survivorship are correct, EXCEPT: A)At the death of a joint tenant, his interest in the property will transfer to the beneficiary listed in his will. B)Property owned JTWROS transfers by operation of law. C)Each tenant owns the same fractional share in the property. D)During his life, each joint tenant has the right to sever his interest in the property without consent.

A)At the death of a joint tenant, his interest in the property will transfer to the beneficiary listed in his will.

Vince has been married to Marty for six years. They are about to buy their first home and have come to you with some questions that they have regarding titling of the home. In your explanation of the different property ownership arrangements, which of the following titling structures can only be entered into by spouses? A)Tenancy by the entirety. B)Tenancy in common. C)Joint tenancy with rights of survivorship. D)Sole ownership.

A)Tenancy by the entirety.

Erica has come to you for estate planning advice. She has been in a long-term relationship with Jude, but they are not married. Because Erica's family is not aware of the relationship between Jude and Erica, Erica is concerned that at her death, Jude will be overlooked by Erica's family. Of the following recommendations, which would you least likely recommend to fulfill Erica's goal of transferring assets to Jude at Erica's death? A)Transfer the ownership of Erica's real estate investments into Tenancy by the Entirety. B)Name Jude as the beneficiary of Erica's retirement plan. C)Advise Erica against creating a will, specifically bequeathing her property to Jude. D)Name Jude as the beneficiary of Erica's life insurance policy.

A)Transfer the ownership of Erica's real estate investments into Tenancy by the Entirety.

Will and Jada have lived in Arizona since their marriage. Jada received an inheritance from her father during their marriage. Will and Jada are moving to Massachusetts for a new job and have some questions regarding their move to a common law (separate property) state from a community-property state. Which of the following statements is correct? A)When a couple moves from a community-property state to a common law (separate property) state, separate property will generally remain separate property. B)When a couple moves from a common law (separate property) state to a community-property state, separate property will generally become community property. C)Community property avoids probate at the death of the first spouse and automatically passes to the surviving spouse by operation of law. D)To get the step-to fair market value in basis at the death of the first spouse, a couple who lives in a common law (separate property) state can elect to treat their separate property as community property.

A)When a couple moves from a community-property state to a common law (separate property) state, separate property will generally remain separate property

Three years ago, Jack and Diane, having been married for 3 years, agreed to purchase some real property and titled it as joint tenants with right of survivorship. At the time of the purchase, Diane did not have any cash, so Jack paid the $50,000 purchase price himself. Over the next five years, Jack and Diane allocated the income and expenses of the property equally, and, luckily for them, the value of the property increased to $350,000. If Jack dies this year, how much will his executor include in his federal gross estate as the value of this real property? A)$50,000. B)$175,000. C)$300,000. D)$350,000.

B)$175,000.

All of the following statements concerning community property are correct, EXCEPT? A)If one spouse inherits property during the marriage, that property is generally not considered community property. B)Assets acquired by either spouse before marriage generally become community property upon their marriage. C)Community property assets are included in probate. D)If one spouse utilizes his paycheck from work performed during the marriage to purchase property, the property is community property.

B)Assets acquired by either spouse before marriage generally become community property upon their marriage.

Of the following types of ownership, which is available for married couples?1. Tenancy by the entirety.2. Tenancy in common.3. JTWROS.4. Tenants by marriage. A)1 only. B)1 and 3. C)1, 2, and 3. D)1, 2, 3, and 4.

C)1, 2, and 3.

Which of the following is/are considered real property?1. Stocks.2. Automobile.3. House.4. Land held for investment. A)3 only. B)1 and 2. C)3 and 4. D)1, 2 and 3.

C)3 and 4.

Twenty-two years ago, Neil and Patrick began dating, and 19 years ago, they began living together. Last year, Neil inherited over $9,000,000 from his grandfather. He wants to ensure that if he dies first, Patrick will be taken care of for the rest of his life. Despite your insistence, Neil does not have a will, and you have advised him previously that state intestacy laws may not protect non-married partners. Which of the following asset ownership options would fulfill Neil's goal of transferring assets to Patrick at his death? A)Community property. B)Tenancy in common with each other. C)Joint tenancy with rights of survivorship. D)Tenancy by the entirety.

C)Joint tenancy with rights of survivorship.

Mateo travels quite often and wants his daughter to have access to his checking account while he is out of town. For this reason, on October 3, 2016, Mateo deposited $100,000 in a checking account. Several years passed and Mateo used the funds for normal living expenses, but his daughter never accessed any of the funds. Recently, on May 2 of this year, Mateo's daughter needed an extra $35,000 to purchase the car of her dreams so she made a withdrawal from the account with full intentions of reimbursing the account. At what date has Mateo made a gift to his daughter? A)October 3, 2016 (the date of the creation of the account). B)December 31, 2016 (the end of the year in which the account was established). C)May 2 of this year. D)May 31 of this year.

C)May 2 of this year.

If Corinne died with the following property interests, which would not be included in her probate estate? A)Community property. B)Property held tenants in common. C)Property held as tenant by the entirety. D)Property owned sole ownership.

C)Property held as tenant by the entirety.

Which of the following statements regarding sole ownership is not true? A)Sole ownership is the complete individual ownership of property with all rights associated with outright ownership. B)Property owned as solely passes through probate at the death of the owner. C)Property owned as sole ownership is excluded from the federal gross estate of the owner. D)Sole ownership allows the owner to use, sell, gift, alienate, convey or bequeath the property without others' approval.

C)Property owned as sole ownership is excluded from the federal gross estate of the owner

Andrea, who is 75 years old, owns a beautiful home in Palm Beach. She has been dating a younger man named Ashton. Ashton is only 23 years old but comes from a wonderful family. While drafting her will, she decides to leave Ashton an interest in her home for the rest of his life. Andrea believes that Ashton is incapable of providing his own home, so she wants him to have a home for the rest of his life. However, once Ashton dies, she wants the property to pass to her great grandchildren, Arden and Allen. What type of interest has Andrea left Arden and Allen? A)Life Estate. B)Usufruct. C)Remainder Interest. D)Term Interest.

C)Remainder Interest.

Dara has owned 100% of the stock of Dara's Baked Goods, a corporation, for 22 years. In the current year, she gifted 50% of the business to her daughter, Sonia, who lives in California with her husband. Sonia does not work at the business and reinvests any income back in the company. With respect to the transfer of the business interest, which of the following statements is correct? A)Sonia's 50% interest in Dara's Baked Goods is community property, owned equally by Sonia and her husband. B)If Sonia's husband dies tomorrow, both his share of Dara's Baked Goods and Sonia's share of Dara's Baked Goods would receive a step-to fair market value in basis. C)Sonia's owns 50% of Dara's Baked Goods outright, and the interest will not be considered community property. D)If Sonia dies tomorrow, the executor of her estate would include 25% of the value of Dara's Baked Goods in her gross estate.

C)Sonia's owns 50% of Dara's Baked Goods outright, and the interest will not be considered community property.

Three years ago, brothers Zach and Cody, purchased real property and titled it as joint tenancy with right of survivorship. At the time of the purchase, Zach did not have any cash, so Cody paid the $50,000 purchase price himself. Over the next five years, Zach and Cody allocated the income and expenses of the property equally, and luckily for them the value of the property increased to $350,000. If Cody dies this year, how much will his executor include in his federal gross estate as the value of this real property? A)$50,000. B)$175,000. C)$300,000. D)$350,000.

D)$350,000.

Which of the following is/are considered intangible personal property?1. Stocks.2. Patents.3. Bonds.4. Land held for investment. A)4 only. B)1 and 2. C)2 and 4. D)1, 2, and 3.

D)1, 2, and 3.

Which of the following would not meet the ascertainable standard requirement if it appeared in a trust document? A)Health. B)Education. C)Maintenance. D)Comfort.

D)Comfort.

Which of the following statements regarding joint tenancy is correct? A)Joint tenancies may only be established between spouses. B)Tenancy by the entirety is a special form of joint tenancy only available to residents of Louisiana. C)Joint tenancies can only be severed with the permission of a court. D)Each joint tenant in a joint tenancy has an undivided, equal interest in the property.

D)Each joint tenant in a joint tenancy has an undivided, equal interest in the property.

Which of the following statements regarding joint tenancy with rights of survivorship is correct? A)Each tenant may bequeath their interest in the property at their death. B)Joint tenancy with rights of survivorship is the same as community property. C)Only spouses can establish joint tenancies. D)Each tenant under a joint tenancy with rights of survivorship has an undivided interest in the property.

D)Each tenant under a joint tenancy with rights of survivorship has an undivided interest in the property.

At the death of either partner, an unmarried couple would like to ensure that all property, insurance policies, and retirement plans transfer to the surviving partner. Which of the following will NOT accomplish the couple's goal? A)Each partner is listed as the beneficiary of the other partner's life insurance policy. B)Each partner is listed as the beneficiary of the other partner's qualified pension plan. C)Each partner is a joint tenant in all of the couple's property owned joint tenancy with rights of survivorship. D)State intestacy laws.

D)State intestacy laws.

Andrea, who is 75 years old, owns a beautiful home in Palm Beach. She has been dating a younger man named Ashton. Ashton is only 23 years old but comes from a wonderful family. While drafting her will, she decides to leave Ashton an interest in her home for a period of three years. Andrea believes that the three years is enough time for Ashton to actually find a job or another "friend." After the three-year period, the property will transfer to her two grandchildren, Arden and Allen. What type of interest has Andrea left Ashton? A)Life Estate. B)Usufruct. C)Periodic Interest. D)Term Interest.

D)Term Interest.