National American University

BUSINESS L 3100

Chapter 52-DECEDENTS ESTATES AND TRUSTS

TRUE/FALSE

1)The debts of a decedent are paid prior to distribution of any balance of the estate to those entitled to re- ceive it.

 

                                           

 

2. Testate distribution describes the distribution that is made when the decedent leaves an invalid will.

 

                                           

 

3. A beneficiary of personal property by will may be called a devisee.

 

                                           

 

4. Generally, the right to make a will is limited to persons 18 or older.

 

                                           

 

5. To make a valid will, the testator must have testamentary capacity.

 

                                           

 

6. Testamentary intent makes the provisions of the testator effective and binding during the testator's life.

 

                                           

 

7. A will is very informal and may be created in any reasonable manner.

 

                                           

 

8. A written will must be signed by the testator at the bottom or end of the will.

 

                                           

 

9. Statutes often require that the attestation of witnesses be made in the presence of the testator and in the presence of each other.

 

                                           

 

10. A will, to be effective, always must be dated.

 

                                           

 

11. A will cannot be modified by merely crossing out a clause and writing in something new.

 

                                           

12. A will may only be revoked by operation of law; it may not be revoked by act of the testator.

 

                                           

 

13. A holographic will is an unwitnessed will that is written by the testator entirely by hand.

 

                                           

 

14. A living will, now legal in most states, provides that if the testator becomes unable to express his or her wishes and is in an irreversible, incurable medical condition, he or she does not want life-sustain- ing medical treatments.

 

                                           

 

15. The judge, not the decedent, has the privilege of naming who is to administer the estate of a person who has died with a will.

 

                                           

 

16. One desiring to leave the balance of an estate to a specified person or group after specific bequests are satisfied may do so by making a residuary bequest in a will.

 

                                           

 

17. When specifically bequeathed property is sold or given away by the testator prior to death, the bequest is considered “redeemed.”

 

                                           

 

18. Antilapse statutes commonly provide that the gift to the deceased beneficiary shall not lapse but that the children or heirs of that beneficiary may take the legacy in the place of the deceased beneficiary.

 

                                           

 

19. Under the Uniform Simultaneous Death Act, if survivorship cannot be established, the property of each person is disposed of as though each had survived the other.

 

                                           

 

20. If a trust is created to take effect within the lifetime of the settlor, it is a testamentary trust.

 

                                           

 

21. The requirements to create a trust are uniform.

 

                                           

 

22. A trust is invalid if a beneficiary lacks capacity.

 

                                           

 

23. A failure by the settlor to name a trustee renders a trust invalid.

                                           

 

24. Every trust must have a beneficiary.

 

                                           

 

25. When property is transferred to a trust, the trustee has legal title and the beneficiary has equitable title.

 

                                           

 

26. A trustee cannot make decisions on matters that could not be foreseen by the settlor.

 

                                           

 

27. A trustee can delegate the performance of personal duties.

 

                                           

 

28. A trustee is not permitted to profit personally from the position of trustee, other than to receive the compensation allowed by contract or law.

 

                                           

 

29. A trustee may keep all matters associated with the trust secret.

 

                                           

 

30. A trust may be terminated by its own terms.

 

                                           

 

MULTIPLE CHOICE

 

1. Which of the following is generally not required for the testator to have testamentary capacity?
   1. The testator knows the exact value of his or her estate.
   2. The testator understands the writing to be a will.
   3. The testator has a reasonable appreciation of the identity of relatives and friends.
   4. The testator has a reasonable appreciation of the extent of the property that may exist at death.

 

                                           

 

2. An individual who desires to make provisions that will be effective only on his or her death is said to have:
   1. probationary intent.
   2. a prejudicial interest.
   3. testamentary intent.
   4. attestation intent.

                                           

 

 

 

3. Unless statutory requirements are met, a will is invalid and the testator:

 

1. 1. is considered to have died testate.
   2. is considered to have died intestate.
   3. is subject to federal law.
   4. has provided guidelines of distribution.

 

                                           

 

4. Which of the following is not a correct statement concerning wills?
   1. Attestation is the act of witnessing the execution of a will.
   2. Most states require two (2) witnesses to the execution of the will.
   3. A will must be dated.
   4. Self-proved wills are wills that carry a presumption that they are valid if executed accord- ing to the requirements set forth by statute.

 

                                           

 

5. A codicil:
   1. must be executed with the same formalities as a will.
   2. is treated the same as a will.
   3. does not invalidate the entire will.
   4. all of the above.

 

                                           

 

6. Where a testatrix executes a will and later has a child:
   1. the child is prohibited by law from receiving anything from the estate.
   2. many states hold that the will of the testatrix is partially revoked by operation of law to provide a share to the after-born child.
   3. a new will must be executed because the birth voids the original will.
   4. the after-born child takes a share by escheat.

 

                                           

 

7. Probate is the act by which:

1. 1. the court declares an instrument is a valid will.
   2. a qualified person may contest the will.
   3. the witnesses sign an attestation clause.
   4. publication of the will takes place.

 

                                           

 

8. A will may be contested on grounds of:
   1. lack of mental capacity of the testator.
   2. undue influence, duress, or mistake.
   3. forgery.
   4. all of the above.

 

                                           

 

 

 

 

 

 

9. Letters testamentary:
   1. are given to an administrator.
   2. are given to an executor.
   3. require a bond to be filed by the person to whom they are given if the will exempts the re- quirement.
   4. none of the above.

 

                                           

 

10. When a testator provides for a bequest of his gold watch to his nephew, but the gold watch is not owned by the testator at the time of death:
    1. the nephew is entitled to an equivalent amount of cash.
    2. the executor must purchase a similar gold watch for the nephew if funds are available.
    3. the bequest to the nephew fails by ademption.
    4. all legacies in the estate abate to provide funds to purchase a gold watch for the nephew.

 

                                           

 

11. A bequest of a pearl necklace is a:
    1. general legacy.

1. 2. specific legacy.
   3. specific ademption.
   4. residuary ademption.

 

                                           

 

12. The relatives of an individual who dies without a valid will may acquire title to the decedent's property through:
    1. intestate succession.
    2. the right of replevin.
    3. testate succession.
    4. the right of acquisition.

 

                                           

 

13. State intestacy statutes commonly provide for distribution in the following order:
    1. spouse, parents, lineals, collateral heirs.
    2. spouse, lineals, collateral heirs, parents.
    3. spouse, lineals, parents, collateral heirs.
    4. spouse, lineals, collateral heirs, parents,.

 

                                           

 

14. When distributees stand in different degrees of relationship:
    1. distribution is made per stirpes.
    2. distribution is made per capita.
    3. a distribution cannot be made without the consent of the state.
    4. the right of escheat applies.

 

                                           

 

 

 

 

 

15. In order for a trust to be created, who must be able to hold legal title?
    1. the beneficiary only
    2. the trustee only
    3. either the beneficiary or the trustee
    4. both the beneficiary and the trustee

                                           

 

16. A decedent's transfer of $10,000 to a trustee, to be held in trust for A, will fail to create a valid trust if:

 

1. 1. it was not supported by consideration.
   2. the trustee lacks capacity.
   3. A is not a family member of the decedent.
   4. the trustee had no opportunity to renounce the trust.

 

                                           

 

17. Which of the following is an incorrect statement concerning trusts?
    1. The trustee has legal title to the corpus.
    2. The beneficiary has equitable title to or beneficial interest in the corpus.
    3. Generally, a beneficiary may not transfer his or her interest in the trust.
    4. A trustee cannot delegate the performance of personal duties.

 

                                           

 

18. Which of the following is not a duty of a trustee?
    1. to use reasonable skill
    2. to keep accurate records
    3. to invest trust assets
    4. to deliver possession of trust assets to the settlor for the trust period

 

                                           

 

19. If the trustee breaches the trust, which of the following remedies might be available?
    1. a money judgment
    2. an injunction
    3. a criminal prosecution
    4. all of the above

 

                                           

 

20. A trust may be terminated:
    1. by its own terms.
    2. by merger of all interests in the same person.
    3. via revocation by the settlor if allowed by the terms of the trust.

1. 4. all of the above.

 

                                           

 

CASE

 

1. Fred and Mary were married. Fred had executed a will prior to the marriage that left all of his property, both real and personal, to his mother. Fred later died without changing his will. Mary feels that she should be entitled to some of Fred's estate. While waiting for Fred's estate to be finalized, Mary remar- ries. Mary's second husband executes a will providing for Mary. Later, after Mary and her husband adopt two children, her second husband dies. Mary feels that her children should be entitled to receive something from her second husband's estate. Is Mary and, later, are her adopted children entitled to re- ceive something under the wills?

 

 

 

2. Tuttle died at age 96, leaving a will that she made at age 40 that provided that her three children would share her estate equally. At the time of her death, only one child, Anna, was living. Tuttle's two de- ceased children, Bill and Caroline, each had two children who were living at the time of Tuttle's death. Anna is claiming that she is entitled to the entire estate because the bequests to Bill and Caroline lapsed upon their deaths prior to Tuttle's death. How will the estate be settled?

 

 

3. Margo had only one son, and her husband had predeceased her. The son was reckless and extravagant, but Margo loved him dearly. She left all her property to a trustee in trust for her son and provided that the trust was a spendthrift trust. Margo further provided that the income from the trust was to be paid to her son quarterly until he reached the age of 30 at which time the full trust corpus was to be paid over to him. After Margo's death and before the son had reached the age of 30, the son signed a con- tract that purported to transfer the entire trust corpus to a finance company. The son was paid for this. The son had also run up many unpaid bills on which he was sued and judgments entered against him. The finance company and the other judgment creditors are seeking to compel the trustee to turn over the trust corpus to them. Decide.