Wills & Estates

Which is NOT considered valid grounds for the removal of a trustee? a. Lack of capacity b. Resignation of the trustee c. Commission of a crime d. Showing favoritism to one or more beneficiaries

ANS: B Resignation of the trustee Correct. If the trustee resigns, there is no need for court removal. Lack of capacity Incorrect. A trustee must have legal capacity. Commission of a crime Incorrect. This is especially valid when the crime involves dishonesty. Showing favoritism to one or more beneficiaries Incorrect. The beneficiaries must be treated equally.

Which procedure occurs during the final account and closing of the estate phase? a. The hearing on creditors' claims and payment of allowed or approved claims b. The computation and filing of a state inheritance tax return or waiver c. The opening of the safe deposit box d. Notice to creditors

ANS: B The computation and filing of a state inheritance tax return or waiver Correct. A copy of the order allowing the final account is filed. The hearing on creditors' claims and payment of allowed or approved claims Incorrect. This hearing takes place during the distribution of the decedent's estate. The opening of the safe deposit box Incorrect. The safe deposit box must be opened before estate distribution. Notice to creditors Incorrect. Creditors receive notice prior to the appointment of trustees and guardians.

To be a settlor, a person must meet all of the following requirements EXCEPT: a. Own a transferable interest in property b. Have the right or power to dispose of a property interest c. Act as the beneficiary d. Have contractual capacity

ANS: C Act as the beneficiary Correct. The settlor is allowed, but not required, to be the beneficiary. Own a transferable interest in property Incorrect. The settlor must own a transferable interest in property. Have the right or power to dispose of a property interest Incorrect. Without this right, property cannot legally be transferred. Have contractual capacity Incorrect. Settlors may not be insane, a minor, or intoxicated at the time of the creation of a trust.

Within the time set by state statute, the personal representative must prepare an inventory that includes all of the following EXCEPT: a. A valuation of the assets at fair market value b. All real and personal property owned by the decedent at the time of death c. Administration expenses d. Identify any encumbrances on assets

ANS: C Administration expenses Correct. These expenses are not assets, and they are included in the final account. A valuation of the assets at fair market value Incorrect. The personal representative usually may hire independent appraisers to assist in valuation. All real and personal property owned by the decedent at the time of death Incorrect. This list must be mailed to a surviving spouse and all other interested persons who request it. Identify any encumbrances on assets Incorrect. The amount of any encumbrances must also be included.

The surviving spouse who is a devisee of the decedent has the highest priority for consideration as the personal representative in informal probate proceedings.

ANS: F False Correct. The person named as representative in the will has the highest priority. True Incorrect. Formal and informal proceedings use the same criteria for representative selection.

The personal representative is required to give personal notice of informal proceedings to all creditors.

ANS: F False Correct. The representative is not obligated to give notice, but he/she should do so. True Incorrect. Personal notice is required only when a creditor has filed a demand.

A single trust may have only one beneficiary.

ANS: F False Correct. The settlor may choose to make the beneficiaries joint tenants. True Incorrect. Multiple beneficiaries usually hold the property as tenants in common.

All states have adopted the Uniform Transfers to Minors Act.

ANS: F False Correct. Vermont, for example, has not adopted the act. True Incorrect. South Carolina, for example, has not adopted the act.

An infant may be a beneficiary of a trust.

ANS: T True Correct. A guardian would generally be required to act as the beneficiary for an infant. False Incorrect. Any person capable of owning property may be a beneficiary.

When a will has been discovered, copies of the will should be prepared for the beneficiaries and devisees.

ANS: T True Correct. A summary of the contents of the will should also be included. False Incorrect. The original will must be given to the probate court.

If the registrar denies an application for informal proceedings, this usually results in the commencement of formal proceedings.

ANS: T True Correct. Applications are often rejected because they do not qualify for informal proceedings. False Incorrect. Informal proceedings are allowed only for uncomplicated wills or estates.

Estate tax is a type of death tax.

ANS: T True Correct. Federal and (some) state governments impose estate tax. False Incorrect. State inheritance taxes are the other type of death tax.

The federal unified gift and estate tax rate is a progressive and cumulative tax.

ANS: T True Correct. For a gift to qualify, it must be intended and given by the donor. False Incorrect. Once the unified credit is used, it is terminated.

A settlor may cancel a trust if a property transfer is accomplished through duress.

ANS: T True Correct. Fraud or undue influence would also be grounds for voiding a trust. False Incorrect. Such a trust would be voidable.

Trustees must generally be paid.

ANS: T True Correct. However, family members acting as trustees may decline compensation. False Incorrect. Trustees perform work for the trust when they buy, sell, and invest property.

If a personal representative does not possess adequate skills to discover, collect, and preserve digital assets, he/she should hire someone who has the requisite knowledge.

ANS: T True Correct. If the personal representative is not competent to handle this portion of the estate, he/she should hire a third party who can assist him/her. False Incorrect. If a personal representative is not technology competent, he/she could be held liable for mismanagement of the estate.

A person applying for informal probate of a will does not need to notify parties interested in the estate unless they have filed a written demand to be notified.

ANS: T True Correct. Interested parties would need to be notified for formal—not informal—probate. False Incorrect. Informal probate, by definition, does not require notice to be given.

If an estate includes digital assets and the decedent has left instructions on how to access those assets, the personal representative may still be precluded from doing so because of state and/or federal law.

ANS: T True Correct. Issues relating to accessing and transferring digital assets may be barred by federal and state law and the ISP's terms of service. False There could be penalties if a personal representative accesses digital assets without proper authority.

Letters of Authority must be presented to have the decedent's mail forwarded to the personal representative.

ANS: T True Correct. Letters of Authority are also required to withdraw funds from the decedent's bank accounts. False Incorrect. Letters of Authority show that the personal representative is the authorized representative of the estate.

Court judges are prohibited from being personal representatives.

ANS: T True Correct. Noncitizens of the United States and nonresidents of the domiciliary state may be disqualified as being unsuitable to be personal representatives. False Incorrect. Convicted felons and minors are also prohibited from being personal representatives.

The requirements for a bond and surety vary from state to state.

ANS: T True Correct. State statutes may or may not require bonds. False Incorrect. Some states require a bond for all personal representatives.

During the family conference, the paralegal should ask whether the decedent made any advancements to any beneficiaries or heirs.

ANS: T True Correct. Such advancements could have direct bearing on the estate. False Incorrect. This is true in all cases.

Summary Administration is allowed for certain small estates.

ANS: T True Correct. Summary Administration is shorter and simpler than regular estate administration. False Incorrect. Many states allow both a collection by affidavit and a Summary Administration procedure.

When applying for the informal probate of a will, an applicant must affirm that he/ she is unaware of any instrument that revokes the will.

ANS: T True Correct. The applicant must also affirm that he/she believes that the will was validly executed. False Incorrect. The applicant must also believe that the submitted instrument is the last will.

The trust instrument must either specifically describe the trust property or clearly define the procedure to be followed in identifying the trust property.

ANS: T True Correct. The court cannot enforce the trust unless the trust property exists. False Incorrect. The validity of a trust depends on its enforceability.

After a decedent's death, his/her estate is a new legal entity.

ANS: T True Correct. The legal existence of the decedent has terminated. False Incorrect. The estate is the taxpayer.

Prior to a hearing, a paralegal might be asked to assemble data on nonprobate property.

ANS: T True Correct. The paralegal may also be asked to send copies of the will to the appropriate beneficiaries. False Incorrect. Taxes may still be due on nonprobate property.

If a decedent leaves real property in another state, the paralegal will need to check the foreign state's statutes to determine the qualifications and residency requirements of the ancillary administrator.

ANS: T True Correct. The paralegal should check to see if the domiciliary personal representative qualifies. False Incorrect. The ancillary administrator will administer out-of-state property.

The personal representative is responsible for discovering, collecting, and preserving all probate assets of any value.

ANS: T True Correct. The personal representative must also manage the probate estate if it includes real estate. False Incorrect. Although the personal representative must make a list of nonprobate assets, he/she is not responsible for discovering, collecting, or preserving them.

The settlor's retention of control over the trust arrangement exposes the settlor to tax liability for the trust income.

ANS: T True Correct. The power to revoke the trust exposes the settlor to this liability. False Incorrect. This is one reason why the settlor may choose to make the trust irrevocable.

The personal representative is generally responsible for paying all taxes out of estate assets.

ANS: T True Correct. The will may specify that devisees pay the inheritance tax out of their legacies. False Incorrect. If the representative distributes the estate and cannot pay the taxes, he/she is personally liable.

Any transferable interest in an object of ownership may become trust property.

ANS: T True Correct. This includes ownership of real or personal property. False Incorrect. A business interest could serve as trust property.

A personal representative is required to file for a Federal Employer Identification Number.

ANS: T True Correct. This number is required before a Notice Concerning Fiduciary Relationship can be filed. False Incorrect. This number is required on fiduciary income tax returns.

When transferring real estate assets, it is the responsibility of the paralegal to prepare the Report of Sale of Land at Private Sale Under Order for Sale.

ANS: T True Correct. This report should be filed with the court. False Incorrect. Preparing documents is an important paralegal duty.

The personal representative will generally NOT need to file a bond if: a. A corporation is appointed personal representative b. There is no will c. The testator requested a bond in the will d. A bond is required by state statute

ANS: A A corporation is appointed personal representative Correct. Such a corporation will likely be a bank or trust company. There is no will Incorrect. A bond usually is required if there is no will, especially if minor children survive the intestate. The testator requested a bond in the will Incorrect. A bond might not be required if the testator stated that the representative may serve without bond. A bond is required by state statute Incorrect. Some states require bonds for all personal representatives.

Which is NOT an essential element of a trust? a. A sale or gift of property b. One or more beneficiaries c. Real or personal property d. One or more trustees

ANS: A A sale or gift of property Correct. A trust differs from other legal property transactions, such as a sale or gift of property. One or more beneficiaries Incorrect. Beneficiaries receive benefits and enforce the trust. Real or personal property Incorrect. Real or personal property is transferred to the trust. One or more trustees Incorrect. Trustees administer and manage the trust. The settlor, who creates the trust, is another essential element of a trust.

The affidavit signed by the personal representative at the end of informal probate proceedings to close the estate and to be discharged must verify all of the following EXCEPT: a. All assets of the estate have been distributed in full to the persons entitled to them. b. All federal and state taxes have been paid. c. A notice to creditors was published more than six months before the date of the affidavit. d. A copy of the affidavit was mailed to all distributees of the estate.

ANS: A All assets of the estate have been distributed in full to the persons entitled to them. Correct. If distribution has not been completed, the reasons for partial distribution must be explained in the affidavit. All federal and state taxes have been paid. Incorrect. Verification that all creditors' and successors' claims have also been paid is also required. A notice to creditors was published more than six months before the date of the affidavit. Incorrect. Six months is considered an adequate amount of time for a creditor to file a claim. A copy of the affidavit was mailed to all distributees of the estate. Incorrect. A copy must also have been mailed to all creditors who have made themselves known.

The trustee in the trust instrument is granted the power to do all of the following EXCEPT: a. Delegate the performance of personal duties b. Hire attorneys and stockbrokers c. Subdivide or exchange real property d. Lend or borrow money

ANS: A Delegate the performance of personal duties Correct. The trustee acts as the fiduciary. Hire attorneys and stockbrokers Incorrect. The trustee can also hire accountants and insurance agents. Subdivide or exchange real property Incorrect. The trustee can also develop or improve real property. Lend or borrow money Incorrect. The trustee can lend or borrow money and pledge or mortgage the trust property.

When petitioning for administration when no will exists, which of the following is a duty of the paralegal? a. Ensuring that the petition and death certificate are filed b. Filing the Affidavit of Publication c. Collecting all information needed to complete and execute the petition for probate of will d. Arranging for witnesses to appear in court to testify on behalf of the testator

ANS: A Ensuring that the petition and death certificate are filed Correct. Either the paralegal or the personal representative can file the petition. Filing the Affidavit of Publication Incorrect. This is filed when arranging for the publication of the Notice of Order for Hearing. Collecting all information needed to complete and execute the petition for probate of will Incorrect. If there is no will, it cannot be probated. Arranging for witnesses to appear in court to testify on behalf of the testator Incorrect. If there is a testator, there is a will.

Which is NOT a reason that many people die without a valid will? a. Inheritance tax b. Estate tax c. Gift tax d. Income tax

ANS: A Inheritance tax Correct. However, many states impose an inheritance tax. Estate tax Incorrect. Many states also impose an estate tax. Gift tax Incorrect. Many states also impose a gift tax. Income tax Incorrect. The federal government and most states impose an income tax.

Which will NOT be issued by the court during the special administration process? a. Inventory and Appraisal of the personal property of the decedent b. Order Approving the Final Account and Report of the Special Administrator c. Letters of Special Administration d. Order Granting Special Administration

ANS: A Inventory and Appraisal of the personal property of the decedent Correct. The Inventory and Appraisal will be filled out and filed by the special administrator. Order Approving the Final Account and Report of the Special Administrator Incorrect. This order allows the final account and discharges the special administrator. Letters of Special Administration Incorrect. These Letters are issued by the court to confer appropriate powers upon the administrator. Order Granting Special Administration Incorrect. This order essentially appoints the special administrator.

Which state has a state income tax? a. New York b. Nevada c. Washington d. Florida

ANS: A New York Correct. New York is one of the 43 states with some form of income tax. Nevada Incorrect. Nevada does not have a state income tax. Washington Incorrect. Washington does not have a state income tax. Florida Incorrect. Florida does not have a state income tax.

Which is an acceptable method for giving notice of a hearing on a petition to an interested party? a. Personally delivering a copy of the notice 14 days prior to the hearing b. Publishing the notice in the newspaper every other week for a month if the identity of interested parties is unknown c. Mailing a copy of the notice at least seven days before the time set for the hearing d. Publishing the notice in the newspaper at least once, 14 days prior to the hearing

ANS: A Personally delivering a copy of the notice 14 days prior to the hearing Correct. This provides an interested party with adequate notice. Publishing the notice in the newspaper every other week for a month if the identity of interested parties is unknown Incorrect. If the identity of interested parties is unknown, a notice must be published for three consecutive weeks. Mailing a copy of the notice at least seven days before the time set for the hearing Incorrect. A copy must be mailed at least 14 days prior to the hearing. Publishing the notice in the newspaper at least once, 14 days prior to the hearing Incorrect. A published notice must appear three times.

Any party that has an interest of $100 or more in an estate may demand that the personal representative post a bond.

ANS: F False Correct. The court may require a bond if it is demanded by a party with an interest equal to or greater than $1,000 in the estate. True Incorrect. The minimum amount of interest required in an estate is $1,000.

Which is NOT a way that the paralegal assists the personal representative? a. Petitioning for probate when no will exists b. Arranging for publication of the Notice of Order for Hearing and Affidavit of Mailing Notice to all interested persons c. Identifying and reviewing objections and arranging for the appearance of witnesses d. Mailing a notice of rights to the spouse and minor children

ANS: A Petitioning for probate when no will exists Correct. The paralegal petitions for administration when no will exists. Arranging for publication of the Notice of Order for Hearing and Affidavit of Mailing Notice to all interested persons Incorrect. All interested persons include creditors. Identifying and reviewing objections and arranging for the appearance of witnesses Incorrect. This is a common paralegal duty in any type of case. Mailing a notice of rights to the spouse and minor children Incorrect. This notice also involves preparing an Affidavit of Mailing.

Which is NOT performed by an ancillary administrator? a. Providing a petition to prove the will b. Collecting assets in a foreign state c. Paying any creditors in a foreign state d. Transferring the balance of the estate to the domiciliary representative

ANS: A Providing a petition to prove the will Correct. This petition establishes the court's jurisdiction over the estate. Collecting assets in a foreign state Incorrect. The ancillary administrator handles out-of-state property. Paying any creditors in a foreign state Incorrect. The ancillary administrator also pays taxes due in the foreign state. Transferring the balance of the estate to the domiciliary representative Incorrect. Transferring this balance is the final duty of the ancillary administrator.

Which of the following is NOT required on applications for informal probate of a will or informal appointment? a. Statement that the time limit for informal probate has expired b. Interest of the applicant in the decedent's estate c. Statement indicating the county or city where the proceedings are to take place d. Decedent's personal information, including name, date of death, domicile, and so on.

ANS: A Statement that the time limit for informal probate has expired Correct. If the time limit has expired, informal probate is unlikely to be possible. Interest of the applicant in the decedent's estate Incorrect. Such interest is required. Statement indicating the county or city where the proceedings are to take place Incorrect. This statement is necessary when the decedent was not domiciled in the state upon his/her death. Decedent's personal information, including name, date of death, domicile, and so on. Incorrect. Information about family members and other beneficiaries is also required.

Which of the following would necessitate the reopening of an estate? a. The location of additional omitted property of the decedent after the estate has been closed and discharged b. A creditor seeking to collect a valid but undischarged claim c. The personal representative committed fraud or inadequate disclosure to a creditor related to the settlement of the decedent's estate d. A claim against a decedent's estate that arose before the decedent's death is presented six months after the date of the first publication of notice to creditors

ANS: A The location of additional omitted property of the decedent after the estate has been closed and discharged Correct. Proper disposition of these assets will necessitate reopening the estate. A creditor seeking to collect a valid but undischarged claim Incorrect. The creditor must press the claim in a judicial proceeding against one or more of those who received the assets. The personal representative committed fraud or inadequate disclosure to a creditor related to the settlement of the decedent's estate Incorrect. The creditor has the right to recover from the personal representative, but the estate will not be reopened. A claim against a decedent's estate that arose before the decedent's death is presented six months after the date of the first publication of notice to creditors Incorrect. Such claims are barred against the estate if notice was given in compliance with the Uniform Probate Code.

A joint federal tax return can be filed for the decedent ONLY if: a. The surviving spouse agrees to file a joint return. b. The surviving spouse remarried before the close of the year. c. The surviving spouse lives in a different state. d. The decedent was employed prior to his/her death.

ANS: A The surviving spouse agrees to file a joint return. Correct. However, the surviving spouse may decide to file a separate, individual return. The surviving spouse remarried before the close of the year. Incorrect. A surviving spouse who remarries before the close of the year may not file a joint return with the decedent. The surviving spouse lives in a different state. Incorrect. Domicile is irrelevant to federal income tax. The decedent was employed prior to his/her death. Incorrect. There are other forms of income in addition to employment wages.

A testator's estate is entitled to the marital deduction if: a. There is a surviving spouse and the decedent leaves all or a portion of the estate to him/her. b. There is a surviving heir other than the spouse, and the decedent leaves all or a portion of the estate to the surviving heir. c. There is no surviving spouse, but had there been, the decedent would have left all or a portion of the estate to him/her. d. The marital deduction is not allowed because it has been repealed.

ANS: A There is a surviving spouse and the decedent leaves all or a portion of the estate to him/her. Correct. Both requirements must be met. There is a surviving heir other than the spouse, and the decedent leaves all or a portion of the estate to the surviving heir. Incorrect. The marital deduction only applies to spouses. There is no surviving spouse, but had there been, the decedent would have left all or a portion of the estate to him/her. Incorrect. The marital deduction only applies when there is a surviving spouse. The marital deduction is not allowed because it has been repealed. Incorrect. The marital deduction can be a substantial tax-saving device for an estate.

Which is a legal obligation of financial institutions with which the decedent did business? a. To close any demand accounts held by the decedent b. To encourage those who hold accounts with the decedent to withdraw funds to avoid death taxes c. To cancel all credit card debts d. To present safe deposit box contents whenever requested

ANS: A To close any demand accounts held by the decedent Correct. Demand accounts include all checking accounts. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. To encourage those who hold accounts with the decedent to withdraw funds to avoid death taxes Incorrect. Banks should prevent this from happening. To cancel all credit card debts Incorrect. However, credit cards should be canceled so that no new debts are incurred. To present safe deposit box contents whenever requested Incorrect. Such contents must be in safekeeping until otherwise directed by the court.

When settling a small estate, Collection by Affidavit is generally allowed in all of the following situations EXCEPT: a. When two days have passed since the death of the decedent b. When the value of the entire estate does not exceed the state's maximum limit c. When the claiming beneficiary is legally entitled to inherit the decedent's estate d. When no application or petition for the appointment of a personal representative is pending or has been granted

ANS: A When two days have passed since the death of the decedent Correct. The minimum number of days that must pass is generally 30 to 45. When the value of the entire estate does not exceed the state's maximum limit Incorrect. However, if the value exceeds the limit, the estate might not qualify as a small estate. When the claiming beneficiary is legally entitled to inherit the decedent's estate Incorrect. However, if the claiming beneficiary is not legally entitled, lengthier probate procedures will be needed. When no application or petition for the appointment of a personal representative is pending or has been granted Incorrect. Such an application would involve a lengthier probate process, and the estate might not qualify as a small estate.

Which can an informally appointed personal representative choose as a means of closing an estate informally and being discharged? a. A filing of the final account with the court b. A closing statement c. A formal closing d. A notice of final distribution of assets

ANS: B A closing statement Correct. A personal representative may use this method if the administration has not been continuously supervised by the court. A filing of the final account with the court Incorrect. After the final account is filed, the personal representative must then distribute the remaining assets to those entitled to receive them. A formal closing Incorrect. If the administration has been continuously supervised by the court, a formal closing is required. A notice of final distribution of assets Incorrect. Distribution of assets is the last duty of the personal administrator, but he/she must then file a closing statement.

The registrar will examine the forms submitted for informal proceedings for all of the following EXCEPT: a. Evidence that other wills exist b. Confirmation that two weeks have elapsed since the decedent's death c. Compliance of the application with the Uniform Probate Code (UPC) d. Evidence that all who have demanded notice of proceedings have been notified

ANS: B Confirmation that two weeks have elapsed since the decedent's death Correct. The UPC requires that only 120 hours must elapse before an application for informal proceedings can be submitted. Evidence that other wills exist Incorrect. If the applicant indicates that another will might still exist, the application will be refused. Compliance of the application with the Uniform Probate Code (UPC) Incorrect. If the requirements of the UPC are not met, the application can be rejected. Evidence that all who have demanded notice of proceedings have been notified Incorrect. All who demand notice of proceedings must be notified before the process can move forward.

The probate court has the power and authority to do all of the following EXCEPT: a. Determine and verify the statutory rights of a spouse b. Create a will if none exists c. Supervise the guardianship of minors d. Establish the validity of a will and appoint a personal representative

ANS: B Create a will if none exists Correct. The probate court appoints an administrator if there is no will. Determine and verify the statutory rights of a spouse Incorrect. Courts have the authority. Supervise the guardianship of minors Incorrect. If found incompetent, a guardian can be removed. Establish the validity of a will and appoint a personal representative Incorrect. The court can also appoint an administrator if there is no will.

Which duty prohibits a trustee from personally profiting from his/her position as trustee (other than the compensation allowed by contract or law)? a. Duty to take possession of and preserve trust property b. Duty of loyalty c. Duty to prevent the investment of the trust property d. Duty to make payments of income and principal to the named beneficiaries

ANS: B Duty of loyalty Correct. The loyalty duty applies to all persons in a fiduciary capacity. Duty to take possession of and preserve trust property Incorrect. The trustee must protect the property from loss or damage. Duty to prevent the investment of the trust property Incorrect. The trustee is required to invest the property in enterprises that will yield income. Duty to make payments of income and principal to the named beneficiaries Incorrect. The beneficiaries may be income beneficiaries or remainder beneficiaries.

Which does NOT generally have to be filed by April 15? a. Federal Income Tax Return b. Federal Estate Tax Return c. Federal Gift Tax Return d. Most state income tax returns

ANS: B Federal Estate Tax Return Correct. The Federal Estate Tax Return must be filed within nine months of the decedent's death. Federal Income Tax Return Incorrect. The Federal Income Tax Returns must be postmarked by April 15. Federal Gift Tax Return Incorrect. Such a return will be due on or before April 15. Most state income tax returns Incorrect. Most states have the same income tax filing date as the IRS.

Which is NOT a duty of the personal representative in closing the estate after the distribution of assets? a. Signing and filing a petition for settlement and distribution b. Paying the law firm's fee c. Proving that the remaining assets of the estate have been distributed d. Submitting a final account that contains a list of all assets collected

ANS: B Paying the law firm's fee Correct. The law firm's fee must be paid before assets are distributed. Signing and filing a petition for settlement and distribution Incorrect. The court will then issue an order setting a hearing on the final account. Proving that the remaining assets of the estate have been distributed Incorrect. In addition, these assets must correspond to the actual inventory. Submitting a final account that contains a list of all assets collected Incorrect. This list must include all probate assets.

A paralegal working with a personal representative might be responsible for all of the following EXCEPT: a. Notifying appropriate parties of the decedent's death b. Providing certified copies of the death certificate to the funeral director c. Searching for and obtaining the will and other personal business records d. Setting a date for the family conference

ANS: B Providing certified copies of the death certificate to the funeral director Correct. The paralegal will obtain copies of the death certificate from the funeral director. Notifying appropriate parties of the decedent's death Incorrect. The paralegal might need to research the locations of all appropriate parties so as to notify them. Searching for and obtaining the will and other personal business records Incorrect. The paralegal will work with the personal representative to gain access as needed. Setting a date for the family conference Incorrect. The paralegal will set the date after contacting the appropriate persons.

While in the process of administering the estate of his deceased brother, Larry, John also died, and his sister, Sue, having been appointed the new personal representative, is now the: a. Administratrix cum testamento annexo b. Public administratrix c. Administratrix de bonis non d. Special administratrix

ANS: C Administratrix de bonis non Correct. De bonis non means "administrator of goods not administered." Administratrix cum testamento annexo Incorrect. This might have been true if John had been unqualified to serve. Public administratrix Incorrect. A public administrator is not a blood relative. Special administratrix Incorrect. A special administratrix is a temporary administrator of the estate.

What would cause a person applying for Letters Testamentary to be deemed unsuitable? a. A misdemeanor record b. Residency in the domiciliary state c. Being a minor d. No history of mental illness

ANS: C Being a minor Correct. A minor may not enter into a binding contract. A misdemeanor record Incorrect. However, a felony record would cause a person to be deemed unsuitable. Residency in the domiciliary state Incorrect. However, residency outside of the domiciliary state could disqualify a person. No history of mental illness Incorrect. Mental illness could be a disqualifying factor.

Who has the highest priority for consideration as personal representative of a decedent's estate? a. Other heirs of the decedent b. Non-devisee surviving spouse of the decedent c. Devisee of the decedent other than the spouse d. Creditor of the decedent

ANS: C Devisee of the decedent other than the spouse Correct. Only the devisee spouse or the person named as representative in the will has higher priority. Other heirs of the decedent Incorrect. Devisees have priority over other heirs. Non-devisee surviving spouse of the decedent Incorrect. The surviving spouse has priority only if he/she is a devisee. Creditor of the decedent Incorrect. A creditor is least likely of this group to be named personal representative.

Which does the personal representative NOT have to file? a. Federal Individual Income Tax Return b. State Estate Tax Return c. Federal Sales Tax Return d. State Individual Income Tax Return

ANS: C Federal sales tax return Correct. There is no federal sales tax. Federal Individual Income Tax Return Incorrect. The estate must pay income tax for the year the decedent died. State Estate Tax Return Incorrect. The State Estate Tax Return is imposed on the decedent's privilege of transferring property. State Individual Income Tax Return Incorrect. The estate must pay income tax for the year the decedent died.

Bob and Mary have a son, Steven, and a granddaughter, Kelly. If Bob made a transfer of interest in property to Kelly, who would be the skip person? a. Mary b. Bob c. Kelly d. Steven

ANS: C Kelly Correct. The skip person is the party who receives the transferred property. Mary Incorrect. Mary is essentially irrelevant to the transaction. Bob Incorrect. Bob is the transferor. Steven Incorrect. Steven is the non-skip person.

The primary purpose of the Uniform Probate Code (UPC) is to: a. Make estate administration more expensive b. Increase the time required to administer an estate c. Provide an alternate system that establishes uniform law d. Make the laws more complex so that administration is more involved

ANS: C Provide an alternate system that establishes uniform law Correct. Such a system needs to be adopted by the states. Make estate administration more expensive Incorrect. The UPC was created to make administration less expensive. Increase the time required to administer an estate Incorrect. The UPC was created to reduce the time required for administration. Make the laws more complex so that administration is more involved Incorrect. The UPC was created to simplify and clarify administration procedures and laws.

The court may require the subscribing witnesses to testify in court to all of the following EXCEPT: a. That they watched the testator sign the will b. That they knew the testator and that he/she was legally capable and competent c. That a self-proved will is valid d. That the testator declared the document to be the will

ANS: C That a self-proved will is valid Correct. A self-proved will must be witnessed in the presence of a notary public.That they watched the testator sign the will Incorrect. Witnesses might also have to testify that they saw the testator initial all the pages. That they knew the testator and that he/she was legally capable and competent Incorrect. Witnesses will have to state that the testator was legally capable and of sound mind. That the testator declared the document to be the will Incorrect. Witnesses will also have to testify that they were asked by the testator to be witnesses to his/her will.

Which CANNOT be subtracted from the gross estate to determine the taxable estate? a. Certain expenses, liens, and encumbrances b. Charitable deductions c. The lessening of the value of estate assets d. Marital deduction

ANS: C The lessening of the value of estate assets Correct. This would not qualify as a deductible loss during the handling of the estate. Certain expenses, liens, and encumbrances Incorrect. These are examples of specific deductible items. Charitable deductions Incorrect. Charitable deductions include any transfer of assets for public, charitable, educational, and literary purposes. Marital deduction Incorrect. The marital deduction is potentially the most valuable deduction that can be taken.

Which is an invalid trust combination? a. The settlor, trustee, and beneficiary are three different people. b. The settlor is also a co-trustee and a co-beneficiary. c. The settlor is also the trustee and beneficiary. d. The settlor is also the beneficiary, and another person is the trustee.

ANS: C The settlor is also the trustee and beneficiary. Correct. The settlor may be the trustee or the beneficiary, but not both. The settlor, trustee, and beneficiary are three different people. Incorrect. This is a common trust combination. The settlor is also a co-trustee and a co-beneficiary. Incorrect. This is legal as long as the settlor is not the sole beneficiary or trustee. The settlor is also the beneficiary, and another person is the trustee. Incorrect. The settlor may be a beneficiary or a trustee, but not both.

Which is an example of a Qualified Terminable Interest Property (QTIP) property? a. A life insurance policy with a one-time lump sum payment to the surviving spouse b. An automobile c. A homestead d. A trust with a life interest to the surviving spouse and remainder to the children

ANS: D A trust with a life interest to the surviving spouse and remainder to the children Correct. The surviving spouse has a qualified income interest for life. A life insurance policy with a one-time lump sum payment to the surviving spouse Incorrect. A QTIP property must provide income for life. An automobile Incorrect. An automobile will depreciate in value and provide no income. A homestead Incorrect. A homestead does not provide income.

Checks from the estate checking account do all of the following EXCEPT: a. Act as creditors' admissions of payment b. Establish a record of all payments and distributions c. Serve as evidence and verification of payment of taxes d. Act as a credit account until estate funds are released

ANS: D Act as a credit account until estate funds are released Correct. Estate funds are used to create the account. Act as creditors' admissions of payment Incorrect. The signature of the creditor shows admission of payment. Establish a record of all payments and distributions Incorrect. This is why the estate account should only include estate funds. Serve as evidence and verification of payment of taxes Incorrect. The cancelled checks act as receipts.

Estate administration may NOT be needed if: a. There is property in registered form b. The decedent has individually owned property in the possession of a third party c. There are outstanding creditors' claims d. An estate is classified as a small estate

ANS: D An estate is classified as a small estate Correct. Estate administration may not be needed if all assets consist entirely of exempt property with a limited monetary value. There is property in registered form Incorrect. Registered property includes deeds and certificates for securities. The decedent has individually owned property in the possession of a third party Incorrect. Letters of Authority are needed to transfer such property. There are outstanding creditors' claims Incorrect. However, estate administration might not be needed if the decedent has no debts.

During the family conference, the paralegal or the supervising attorney should: a. Provide family members with a list of personal debts b. Assume no family members were owed a debt by the deceased c. Provide family members with the names of the deceased's financial advisers d. Discuss the need for appointing fiduciaries

ANS: D Discuss the need for appointing fiduciaries Correct. The paralegal or the supervising attorney should ask if any trustees named in a testamentary trust are willing to serve. Provide family members with a list of personal debts Incorrect. The paralegal or the supervising attorney should request a list of personal debts from the family. Assume no family members were owed a debt by the deceased Incorrect. The paralegal or the supervising attorney should explain that any creditors will need to file a claim. Provide family members with the names of the deceased's financial advisers Incorrect. The paralegal or the supervising attorney should ask for the contact information of the deceased's financial advisers.

Which is NOT a trustee's duty? a. Duty to account b. Duty of performance and due care c. Duty to make payments of income and principal to the named beneficiaries d. Duty to prevent the investment of the trust property

ANS: D Duty to prevent the investment of the trust property Correct. The trustee is required to invest the property in enterprises that will yield income. Duty to account Incorrect. The trustee must keep accurate records to account for expenditures, investments, and other actions. Duty of performance and due care Incorrect. The trustee's main duty is to carry out the terms and purpose of the trust. Duty to make payments of income and principal to the named beneficiaries Incorrect. The beneficiaries may be income beneficiaries or remainder beneficiaries.

Which of the following states imposes an inheritance tax on successors? a. Wyoming b. Minnesota c. South Carolina d. Kentucky

ANS: D Kentucky Correct. Kentucky imposes an inheritance tax on the person receiving the property. Wyoming Incorrect. Wyoming has no income tax, inheritance tax, or generation-skipping transfer tax. Minnesota Incorrect. Minnesota does not have an inheritance tax or a generation-skipping transfer tax. South Carolina Incorrect. South Carolina has a generation-skipping transfer tax but not an inheritance tax.

Certified copies of the Letters Testamentary or Letters of Administration are needed to do all of the following EXCEPT: a. Open an account in the name of the estate b. Open the decedent's safe deposit box c. Withdraw money from existing savings accounts of the decedent d. Obtain the Letters of Authority

ANS: D Obtain the Letters of Authority Correct. The Letters Testamentary and Letters of Administration are both Letters of Authority. Open an account in the name of the estate Incorrect. The Letters prove that the person is the authorized representative of the estate. Open the decedent's safe deposit box Incorrect. The bank will not release the contents without these papers. Withdraw money from existing savings accounts of the decedent Incorrect. The Letters show that the person has the power to withdraw funds.

Which is NOT a duty of the personal representative during informal probate? a. Providing a final account b. Paying creditors' claims c. Holding and managing the estate d. Obtaining court approval for every item distributed

ANS: D Obtaining court approval for every item distributed Correct. Obtaining court approval is required for formal probate, not informal probate. Providing a final account Incorrect. A list of the decedent's probate assets is needed to close the estate. Paying creditors' claims Incorrect. Valid creditors' claims must be paid after the four-month notification period. Holding and managing the estate Incorrect. The representative has the same power over title that the decedent had.

When is the personal representative's appointment for informal proceedings terminated? a. When the formal closing ends b. Automatically upon closing of the estate c. When the personal representative has completed all duties that he/she is required to perform d. One year after the closing statement is filed, if no proceedings involving the personal representative are pending in the court

ANS: D One year after the closing statement is filed, if no proceedings involving the personal representative are pending in the court Correct. When the formal closing ends Incorrect. A formal closing is required only when the administration has been continuously supervised by the court. Automatically upon closing of the estate Incorrect. The Uniform Probate Code provides a one-year grace period for the resolution of unforeseen business. When the personal representative has completed all duties that he/she is required to perform Incorrect. The one-year grace period allows for the personal representative to resolve unforeseen matters that may arise.

The court may appoint or replace a trustee in all of the following circumstances EXCEPT: a. The trustee is incompetent b. The named trustee declines the position. c. The trustee dies. d. The named trustee is also a co-beneficiary.

ANS: D The named trustee is also a co-beneficiary. Correct. The trustee can be a co-beneficiary, but not the sole beneficiary. The trustee is incompetent. Incorrect. If a trustee's incompetence is shown, the court can appoint a replacement trustee. The named trustee declines the position. Incorrect. The court will not allow a trust to fail for lack of a trustee. The trustee dies. Incorrect. If the trustee dies, a new trustee must be named.

To establish jurisdiction, the petition to prove a will must generally include: a. The decedent's place of birth b. The estimated value of the real and personal nonprobate assets c. The amount of debts paid prior to the death of the decedent d. The original will

ANS: D The original will Correct. The original will is not needed only if that will has already been filed with the court. The decedent's place of birth Incorrect. However, the decedent's domicile and place of death are required information. The estimated value of the real and personal nonprobate assets Incorrect. Only the value of the probate assets is required. The amount of debts paid prior to the death of the decedent Incorrect. Such debts would cease to be debts when they were paid.

Witnesses to a will must appear in court to testify to the validity of the will.

ANS: F False Correct. A signed affidavit may be used to prove a will. True Incorrect. A self-proved will removes the need for witness testimony.

Only family members should be invited to the family conference.

ANS: F False Correct. All persons named in a will, or heirs, if there is no will, should be invited to attend. True Incorrect. Nonfamily members may be named in the will.

Informal probate requires the appraisal of estate assets.

ANS: F False Correct. Appraisal is not required, but it may be necessary. True Incorrect. Formal probate requires the appraisal of estate assets.

Beneficiaries of a trust must be defined by name.

ANS: F False Correct. Beneficiaries may be defined by class designation. True Incorrect. A trust can be set up, for example, "for the benefit of my grandchildren."

The attorney is likely to be called in to assist in sorting out a decedent's estate before the funeral arrangements are complete.

ANS: F False Correct. Copies of the death certificate are obtained from the funeral director after the attorney has been employed. True Incorrect. The funeral director obtains the necessary burial permits and death certificate.

Creditors can contest a will, but they cannot challenge the appointment of a personal representative.

ANS: F False Correct. Creditors can challenge the appointment of a personal representative. True Incorrect. Creditors cannot contest a will.

The gross estate is the taxable estate.

ANS: F False Correct. Deductions can be taken from the gross estate to determine the taxable estate. True Incorrect. The entire value of the gross estate is rarely completely taxable.

A person applying for informal appointment does not need to notify any other parties who might have a right to be personal representative.

ANS: F False Correct. He/She must notify anyone with a superior right to be appointed. True Incorrect. People with an inferior right to appointment do not have to be notified.

Any state in which a decedent held property may impose estate tax on the decedent's estate.

ANS: F False Correct. However, property held in other states may be taxed. True Incorrect. Only the state of the decedent's domicile may impose estate tax.

If there are two trustees, one may make a determination to take action without the other's consent.

ANS: F False Correct. If there are only two trustees, they must agree on any action concerning trust property. True Incorrect. This is usually only true if there are more than two trustees and the trustee taking action is also the settlor.

Under the Uniform Probate Code (UPC), formal probate is conducted under the supervision of a judge without notice to interested persons.

ANS: F False Correct. Informal probate does not require notice to interested persons. True Incorrect. Interested persons must be given notice for formal probate.

Informal probate generally extends the time required to complete the administration of a decedent's estate.

ANS: F False Correct. Informal probate requires fewer documents to be filed with the court than does formal probate. True Incorrect. Informal probate requires fewer steps than does formal probate.

Trust income is not subject to federal income tax.

ANS: F False Correct. Personal income, corporate income, and trust income are taxable. True Incorrect. Trust income is a form of personal income.

The personal representative may personally profit from estate transactions.

ANS: F False Correct. Profit taking violates the fiduciary duty to the estate. True Incorrect. The representative is not allowed to buy or sell estate property while retaining a personal interest.

Property in joint tenancy is a probate asset and should be included in the list of assets subject to probate.

ANS: F False Correct. Property in joint tenancy is nonprobate property. True Incorrect. Property in joint tenancy passes directly to the joint tenant.

Probate and estate administration are the only methods of settling an estate.

ANS: F False Correct. Small estate settlement and administration is an alternative to probate. True Incorrect. Some states allow heirs or devisees to collect, divide, and distribute assets in small estates.

Death tax payments are assessed against all income brackets, from the poor to the wealthy.

ANS: F False Correct. Small estates are no longer required to file federal estate tax returns. True Incorrect. Death tax payments are assessed only against the wealthy and moderately wealthy.

All states are required to adopt the Uniform Probate Code (UPC).

ANS: F False Correct. States may adopt the UPC, but they are not required to do so. True Incorrect. Many states continue to use more traditional methods of estate administration.

A person who has a financial or property interest in an estate must file a demand for notice of any order or filing related to the estate within 120 hours of the passing of the decedent.

ANS: F False Correct. Such a demand may be filed any time after the death of a decedent. True Incorrect. An application for informal proceedings may not be submitted until 120 hours after the decedent's death

After the creation of a trust, title to property placed in the trust passes to at least two persons with the trustee receiving the equitable title and the beneficiary receiving the legal title.

ANS: F False Correct. The beneficiary receives the equitable title. True Incorrect. The trustee receives the legal title.

Every transferor is allowed a lifetime exemption from the generation-skipping transfer tax.

True