Legal Trusts, Wills & Probate 2 — Questions and Answers
Question 1: Under the traditional common law rule against perpetuities, an interest in property is void unless it must vest, if at all, within what time period?
- 50 years from the creation of the interest
- A life in being at creation of the interest plus 21 years (Correct answer)
- 100 years from the date the instrument is executed
- The lifetime of the last surviving beneficiary
Correct answer: A life in being at creation of the interest plus 21 years
The common law rule against perpetuities voids any contingent future interest that might vest beyond a life in being at the creation of the interest plus 21 years.
Question 2: What is a 'spendthrift trust'?
- A trust designed to make large, frequent distributions to beneficiaries
- A trust provision restricting a beneficiary's ability to alienate their interest and shielding it from their creditors (Correct answer)
- A charitable trust established for educational or research purposes
- A trust that terminates and distributes assets when a beneficiary reaches a specified age
Correct answer: A trust provision restricting a beneficiary's ability to alienate their interest and shielding it from their creditors
A spendthrift trust includes a clause preventing beneficiaries from voluntarily assigning their interest and barring most creditors from reaching trust assets before distribution.
Question 3: What does the distribution method 'per stirpes' mean?
- Each surviving heir receives an exactly equal share regardless of family branch
- By representation — each family branch takes the share the predeceased ancestor would have received (Correct answer)
- Distribution is made only to the surviving spouse and lineal descendants
- Shares are allocated in proportion to each heir's financial need
Correct answer: By representation — each family branch takes the share the predeceased ancestor would have received
Under per stirpes, if a beneficiary predeceases the testator, that beneficiary's share passes to their own descendants, preserving distribution by family branch.
Question 4: What is a 'living will' (advance healthcare directive)?
- A revocable will that takes effect while the testator remains alive
- A document expressing a person's wishes regarding medical treatment if they become unable to communicate (Correct answer)
- A revocable trust funded and operative during the grantor's lifetime
- A joint will executed simultaneously by two spouses
Correct answer: A document expressing a person's wishes regarding medical treatment if they become unable to communicate
A living will (advance directive) records an individual's preferences about life-sustaining treatment and end-of-life care for situations where they can no longer speak for themselves.
Question 5: What is the 'elective share' available to a surviving spouse?
- The amount the testator voluntarily elects to leave to the surviving spouse in the will
- A surviving spouse's statutory right to claim a set portion of the deceased spouse's estate regardless of the will's provisions (Correct answer)
- The executor's fee elected by the surviving spouse for administering the estate
- A tax election made by the surviving spouse to defer estate taxes
Correct answer: A surviving spouse's statutory right to claim a set portion of the deceased spouse's estate regardless of the will's provisions
The elective (or forced) share gives a surviving spouse the right to take a statutory percentage of the decedent's estate, preventing complete disinheritance even if the will provides otherwise.
Question 6: What is 'probate'?
- A federal tax assessed on the transfer of property at death
- The court-supervised process of validating a will, paying debts, and distributing a decedent's estate (Correct answer)
- A type of revocable trust used to avoid court involvement at death
- The formal reading of a will aloud to all named beneficiaries
Correct answer: The court-supervised process of validating a will, paying debts, and distributing a decedent's estate
Probate is the legal process by which a court authenticates a will (or applies intestacy law), supervises payment of debts, and oversees distribution of the estate to rightful heirs.
Question 7: What is the primary estate-planning advantage of a revocable living trust compared to a will?
- It eliminates all federal and state estate taxes on transferred assets
- It avoids probate, allowing assets to pass directly to beneficiaries without court involvement (Correct answer)
- It provides stronger creditor protection than a will or irrevocable trust
- It removes assets from the grantor's taxable estate during their lifetime
Correct answer: It avoids probate, allowing assets to pass directly to beneficiaries without court involvement
Because assets in a revocable living trust are technically owned by the trust — not the individual — they pass to beneficiaries at death outside the probate process.
Legal Trusts, Wills & Probate 2
Under the traditional common law rule against perpetuities, an interest in property is void unless it must vest, if at all, within what time period?