CTFA Estate Planning and Administration 1 — Questions and Answers
Question 1: Which document allows an individual to name a personal representative and specify how their estate should be distributed after death?
- Last will and testament (Correct answer)
- Durable power of attorney
- Living trust
- Beneficiary designation form
Correct answer: Last will and testament
A last will and testament is the legal document that names a personal representative (executor) and directs how the decedent's probate estate is distributed.
Question 2: What is the primary advantage of a revocable living trust over a will in estate planning?
- Avoidance of probate (Correct answer)
- Reduction of estate taxes
- Protection from creditors
- Elimination of gift taxes
Correct answer: Avoidance of probate
A revocable living trust allows assets to pass directly to beneficiaries without going through the public, time-consuming probate process.
Question 3: Under the Uniform Probate Code, what is the order of priority when multiple claims exist against an estate?
- Funeral costs, administration expenses, then creditor claims (Correct answer)
- Creditor claims, then funeral costs, then taxes
- Taxes first, then all creditor claims equally
- All claims paid pro rata from the estate
Correct answer: Funeral costs, administration expenses, then creditor claims
Most states prioritize estate administration costs and funeral expenses before general creditor claims when distributing a decedent's estate.
Question 4: Which type of asset generally passes outside of probate directly to a named beneficiary?
- Life insurance with a named beneficiary (Correct answer)
- Real estate titled solely in the decedent's name
- Personal property listed in the will
- Bank accounts with no beneficiary designation
Correct answer: Life insurance with a named beneficiary
Life insurance proceeds payable to a named beneficiary pass outside of probate and are not subject to the terms of the will.
Question 5: What is a pour-over will in the context of estate planning?
- A will that directs probate assets into an existing trust (Correct answer)
- A will that distributes assets equally among all heirs
- A will used only for minor children's guardianship
- A will that bypasses state intestacy laws
Correct answer: A will that directs probate assets into an existing trust
A pour-over will directs any assets that were not transferred into a revocable living trust during life to 'pour over' into the trust at death.
Question 6: In intestate succession, when a decedent leaves a spouse and two adult children, which statement is most commonly true under state law?
- The spouse and children share the estate according to state statute (Correct answer)
- The spouse inherits the entire estate automatically
- Children inherit first before the surviving spouse
- The estate is split equally among all three parties
Correct answer: The spouse and children share the estate according to state statute
Intestate succession laws vary by state, but most split assets between a surviving spouse and children according to a statutory formula.
CTFA Estate Planning and Administration 1
Which document allows an individual to name a personal representative and specify how their estate should be distributed after death?