What Is Your Estate Planning IQ?


I. Currently, how much can a person gift during life which will be free of federal estate taxes at death?

A. $4,450,00 plus $12,000 per donee per year

B. Any lifetime gift, regardless of the amount, will be subject to estate taxation.

C. $3,450,00 plus $13,000 per donee per year

D. $5,450,00 plus $14,000 per donee per year

II. As a general rule, almost any asset owned in a person’s sole name is subject to probate  at his or her death.

A. True

B. False

III. Which of the following statements is / are true?The primary purpose of a revocable trust is to avoid probate.

A. The primary purpose of a revocable trust is to avoid probate.

B. Mortgaged property can be placed in a revocable trust

C. An amendment to a revocable trust can alter any substantive provision of the trust.

D. All of the above.

IV. What is the main objective of estate planning?

A. To avoid all taxes.

B. To dispose of a person’s assets according to his or her wishes.

C. To avoid probate.

V. The probate process involves all of the following EXCEPT:

A. Collecting and paying a decedent’s debts.

B. Distributing property to heirs and beneficiaries.

C. Preparing a person’s will.

D. Paying a decedent’s necessary taxes.

VI. Distribution of estate assets to a decedent’s heirs and beneficiaries takes place before the estate pays any creditor claims.

A. True

B. False

VII. In which of the following situations would payment of proceeds from a life insurance policy avoid probate?

A. When the proceeds exceed $1 million.

B. When a beneficiary has been designated.

C. Life insurance proceeds are always subject to probate regardless of the situation.

VIII. What party is responsible for overseeing the probate process and determining the outcome of estate claims?

A. The estate executor.

B. The decedent’s next of kin.

C. The probate judge.

IX. Who or what owns the title to property placed in a living trust?

A. The trustee.

B. The trust beneficiary.

C. The trust.

D. All of the above, jointly

X. What is the role of a successor trustee?

A. To establish and oversee a trust after the death of a decedent.

B. To assume responsibility of a trust and its assets when the original trust is no longer capable of the role.

C. To ensure that the provisions of a decedent’s will conform to the provisions of a      trust.

XI. How will assets that pass per stirpes be paid?

A. Only to the spouse of a decedent.

B. To a beneficiary’s decedents if the beneficiary is not living at the time the assets are              to be distributed.

C. Only to children of a decedent.

XII. The _______________ of an estate consists of all assets that are left over after all specific bequests have been made.

A. Principal

B. Residuary

C. Corpus

XIII. To ensure that assets in a trust cannot be attached by a beneficiary’s creditors, the trust should:

A. Not be funded until the settler dies.

B. Include a spendthrift provision.

C. Be set-up as an AB trust.


  1. D
  2. A
  3. D
  4. B
  5. C
  6. B
  7. B
  8. C
  9. A
  10. B
  11. B
  12. B
  13. B







Being a Responsible Trustee


I’m A Trustee!   What Do I Do?

Often times the grantor or settler (person creating the trust) is the initial trustee and beneficiary of his or her trust.  Upon his or her death or incompetency, a successor trustee takes control of the trust.  Being named trustee is not a job to be taken lightly.  Trustees are typically selected based upon their reliability, trust and character.  As trustee, one has a fiduciary duty to act in the best interest of the trust and its beneficiaries.

The trustee is the legal personification of the trust.  As such, it is important that the trustee understand his or her duties and responsibilities.  The most important role of the trustee is to represent the trust and officially act in its name.  The trustee should always identify him or herself as serving in such capacity.  For example, documents should be signed “John Smith as Trustee of the Smith Family Trust”.  Failure to properly identify oneself as trustee could result in personal liability, such as being personally obligated for debts intended to be obligations of the trust.  When done properly, trustees can enter into contracts, be listed as owning assets of the trust and conduct all trust business.

A trustee must honor the settlor’s directions as stated in the terms of the trust.  The trust document should be completely read by the trustee.  Court approval is required if the terms are to be varied.

Trust property must always be segregated from the trustee’s personal property.  As a fiduciary, trustees are never allowed to derive personal gain or advantage from the use or sale of a trust asset.  Any self-interest transaction must be fully disclosed to and approved by all beneficiaries.  A trustee has a duty to maintain clear and complete records for all money and property of the trust and may be called upon to produce an accounting of all trust activity.

Trust assets often include securities.  Trustees are held to the prudent investor standard which in part dictates that a disproportionate amount of trust assets shall not be invested in one particular stock, bond or assets.  Investment advisors may be employed to assist in management of the assets if permitted by the trust agreement.

The trustee is responsible for filing annual state and federal income tax returns. Most trust agreements authorize the trustee to hire a professional to prepare the tax returns.  Failure to file tax returns could result in personal liability for penalties and interest.

Anyone accepting the job of trustee should consult with an attorney, preferably the preparer of the trust agreement, for direction and clarification of any questions.  Serving as trustee is a big responsibility, but also a great way to honor someone who has placed great trust in you.