The Ultimate Estate Planning Quiz

By: Staff

4 Min Quiz

Image: refer to hsw

About This Quiz

While you might not want to think about what will happen to your assets after you die, proper estate planning is necessary if you want your wishes to be carried out. Wills and trusts are just part of estate planning, a complex but important segment of financial planning. Take this quiz to determine if you have the knowledge to get your assets to your heirs with the least hassle and cost.

What is the main idea of estate planning?

Without creating and clarifying a plan, your assets may be caught up in the legal system and may not go to the people you would like them to go to.

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When does estate planning take effect?

Most estate plans focus on the death of the individual, but in the unfortunate circumstance that a living person becomes incapacitated, they will usually take effect as well.

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In addition to a will, what else is a common element of an estate plan?

Someone must be assigned to look after and distribute the assets. A bank account held in trust may also be part of the estate plan.

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What is a health care proxy?

Akin to a power of attorney for financial matters, a health care proxy appoints someone to handle decisions about your health should you be unable to make such decisions.

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What is a benefit of a trust over a will?

Since it doesn't need to go to court, a trust can be processed and executed more quickly and at a lower cost.

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In the term "last will and testament," what were the original meanings of "will" and "testament?"

Nowadays, the two terms are used interchangeably, which is why the document is typically referred to simply as a will.

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In addition to the distribution of your assets, what else is a good use for a will?

A will is not solely for financial matters. It is designed to describe all of your final wishes about significant matters, including who should look after your children.

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What does it mean to die intestate?

If you do not leave a will when you die, the state determines who receives which of your assets, regardless of your wishes.

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When you give someone power of attorney, what is he or she called?

Your agent has the power to handle your finances in your place. The agent does not have to be a lawyer.

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What is different about durable power of attorney?

A regular power of attorney drops out of effect if you become incapacitated. Only a durable power of attorney continues in such a situation.

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What is power of attorney fraud?

Because of the growth of power of attorney fraud, experts recommend consulting a lawyer before signing a power of attorney form. You must also ensure that you completely trust your agent.

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At what size estate does a trust start making sense?

Estates of $100,000 can be subject to probate court proceedings, so avoiding them by setting up a trust can be beneficial. Trusts become most effective, however, once an estate is valued above $1 million.

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What is the typical cost of probate proceedings?

Probate fees cover the court costs and executor's fees. Probate court proceedings also take a long time to process.

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What three parties are involved in a trust?

The grantor is the person who sets up the trust and the trustee oversees the assets. The beneficiary is the person who will get the assets after the grantor dies.

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What is an inter vivos gift?

In the U.S., a person can give another person up to $12,000 per year as a tax-free gift. Thus you can start distributing parts of your estate to your heirs while you are still alive.

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