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Interactive Quiz for ALT-12e, Chapter 52

Chapter 52 – Wills and Trusts

  1. Intestacy laws are:
  1. laws that establish the requirements of a valid will.
  2. laws that protect insured parties from duress.
  3. laws that specify how property will be distributed if someone dies without a will.
  4. laws that govern the formation of Totten trusts.

Answers:

  1. Incorrect. Intestacy laws do not establish these requirements.
  2. Incorrect. Intestacy laws do not have to do with duress and insurance.
  3. Correct. If someone dies and does not leave a valid will, state laws will specify how the person’s property should be distributed. These laws are known as intestacy laws.
  4. Incorrect. The laws governing Totten trusts are not called intestacy laws.
  1. Frank dies intestate (without a valid will). He leaves an estate worth close to $2 million. Who will settle Frank’s affairs and oversee the distribution of his estate?
  1. His executor.
  2. The trustee.
  3. The county clerk.
  4. The administrator.

Answers:

  1. Incorrect. Because he has no will, Frank has no executor.
  2. Incorrect. Frank has no trust.
  3. Incorrect. The county clerk would not perform these functions.
  4. Correct. An administrator is someone appointed by a court to settle the affairs and distribute the estate of a person who dies intestate.
  1. In her will, Lourdes gives Marie her Steinway grand piano. This is known as:
  1. a devise.
  2. a general legacy.
  3. a specific bequest.
  4. an annulment.

Answers:

  1. Incorrect. A devise is a gift of real property by will.
  2. Incorrect. This is a specific, not a general, legacy.
  3. Correct. This is a gift of specifically identified personal property, so it is a specific bequest.
  4. Incorrect. This is not an annulment.
  1. In order to make a valid will, which of the following IS NOT necessary?
  1. The testator must have legal capacity.
  2. The testator must sign the will.
  3. The testator must acknowledge the provisions of the will on his or her deathbed.
  4. The testator must understand what he or she is doing when he or she makes the will.

Answers:

  1. Incorrect. This is a requirement for a valid will.
  2. Incorrect. This is a requirement for a valid will.
  3. Correct. The testator does not need to acknowledge the will’s provisions on his or her deathbed.
  4. Incorrect. This is one of the requirements of a valid will.
  1. A nuncupative will may be defined as:
  1. a will written under duress.
  2. a will that is written but not signed.
  3. an oral will made before witnesses.
  4. a will that includes later additions.

Answers:

  1. Incorrect. This does not describe a nuncupative will.
  2. Incorrect. This does not describe a nuncupative will.
  3. Correct. This describes a nuncupative will. These kinds of wills are not permitted in most states.
  4. Incorrect. This does not describe a nuncupative will.
  1. Arlen, in his will, leaves $5,000 to his friend Pete. Later, he and Pete have a falling out, so Arlen decides to change his will to give the $5,000 to his friend John instead. Arlen tells John of his intention, but before he has a chance to change his will, Arlen dies. Is Pete entitled to anything under Arlen’s will?
  1. No. Pete will get nothing because Arlen told John that he wanted to change the will and that John would get the $5,000.
  2. Yes. Pete will take the $5,000 because Arlen never changed his will.
  3. Yes. Pete will take the $5,000 but only if John agrees.
  4. Yes. Pete will take the $5,000 but only if the relevant intestacy statute permits such gifts.

Answers:

  1. Incorrect. Pete will get the money, because Arlen did not change his will.
  2. Correct. Pete will take the $5,000, because Arlen did not change his will.
  3. Incorrect. Pete will take the $5,000 regardless of whether John agrees.
  4. Incorrect. Pete takes the $5,000, because Arlen so provided in his will. No intestacy statute is relevant here, because normally intestacy laws govern the distribution of a deceased’s property only when the deceased left no will—and Arlen left a will.
  1. Bob states in his will that his assets should be divided in the following manner: “to my children Scott, Eric, and Jean equally OR, in the event that anyone of them predecease me, their one-third portion to their heirs, if they have any.” This kind of distribution is known as:
  1. a per capita distribution.
  2. a per stirpes distribution.
  3. a per annum distribution.
  4. an equitable distribution.

Answers:

  1. Incorrect. This is not a per capita distribution.
  2. Correct. This is a per stirpes distribution because the heirs of Bob’s children take the share of their parents, if their parents have died.
  3. Incorrect. This is not a per annum distribution.
  4. Incorrect. While the distribution may be fair, it is not known as an equitable distribution.
  1. An inter vivos trust is:
  1. created by a beneficiary for a trustee.
  2. created through the provisions of a will.
  3. executed by a grantor during his or her lifetime.
  4. always irrevocable.

Answers:

  1. Incorrect. Trusts are never created by beneficiaries for trustees.
  2. Incorrect. This describes a testamentary trust.
  3. Correct. This is a living, or an inter vivos, trust.
  4. Incorrect. These trusts may be revocable.
  1. Which of the following IS NOT a legal duty of a trustee?
  1. To furnish complete and accurate information to beneficiaries.
  2. To provide sound investment advice to beneficiaries.
  3. To keep clear and accurate accounts of the trust’s administration.
  4. To act with honesty, good faith, and prudence while administering the trust.

Answers:

  1. Incorrect. This is a duty of trustees.
  2. Correct. This is not one of the legal duties of a trustee.
  3. Incorrect. This is a duty of trustees.
  4. Incorrect. This is also a duty of trustees.
  1. Assume that before he became ill, Roland had an attorney draft a document stating that in the event of a future accident resulting in a situation where Roland would continue to live only through the use of life-support equipment, Roland preferred not to be connected to such equipment. What is this kind of document called?
  1. A living trust.
  2. Medicare.
  3. A Medicaid codicil.
  4. A living will.

Answers:

  1. Incorrect. This is not a living trust, which transfers assets to beneficiaries.
  2. Incorrect. This is not Medicare.
  3. Incorrect. This is not a Medicaid codicil.
  4. Correct. This is a living will, which allows a person to control what medical treatment he or she will accept in the event of a serious accident or illness.