Personal Finance: Chapter 16- Ivy Tech Anderson

A trust created by your will that becomes active upon your death is known as a: testamentary trust.
After watching her uncle linger on life support for months Jill has decided she does not want that to happen to her. What would you advise Jill to do? Draft a living will
A letter to your surviving spouse or a close friend that provides details on how to execute the will is known as a: letter of last instructions.
A living trust is one: in which you place your assets while you are alive.
Ganesh gave his daughter a $100,000 gift during 2017. How much of this gift will be subtracted from his lifetime estate tax exemption? $86,000
The IRS imposes an additional generation-skipping tax on estates if: they skip over at least one generation.
In 2014, the first __________ of your estate can be passed tax-free to your heirs. $5.34 million
The __________ of the will is the individual responsible for carrying out the provisions listed in the will. executor
The process of planning for transferring your accumulated wealth to your heirs upon your death is known as: estate planning.
A legal document that provides details on how you want your assets to be divided among your heirs is a(n): will.
The executor of your will is charged with distribution of your estate to your heirs after: paying all debts and taxes associated with the estate.
The provision in the 2010 Tax Relief Act that allows a deceased spouse’s unused portion of the estate tax to be shifted to the surviving spouse is called the: portable estate exemption.
In 2017, you can gift up to __________ to as many people as you like and the recipients will not have to pay taxes on the gift. $14,000
When two or more people share ownership of assets and the assets do not automatically transfer to the surviving owner unless expressly stated in the deceased owner’s will it is known as: tenancy in common.
A codicil is an attachment to a will that: alters or amends the will.
A __________ gives someone legal authority to make decisions on your behalf if your health issues prevent you from making these decisions. durable power of attorney
The primary reason to use a Q-TIP trust is to: keep your estate from being controlled by your spouse’s future spouse.
Nelda’s husband died and passed along his estate valued at $755,000. However Nelda’s estate is worth far more. As of 2017, what is the maximum amount Nelda can pass along to her children with incurring estate taxes? $10,980,000
A __________ is a legal document that states your medical care wishes should you contract a terminal illness, or be in a severe accident, that renders you unable to make decisions for yourself. living will
Which of these is NOT a benefit of setting up a trust? Up-front costs are low
A(n) __________ trust allows the trustee to distribute the funds among the beneficiaries on a needs basis. sprinkling
Jim’s estate is valued at $15.34 million. He leaves his entire estate to his wife, Ellen. How much will Ellen have to pay in estate taxes upon his death? zero
A legal entity where property can be held for the benefit of others is known as a: trust.
__________ is a form of joint ownership where both spouses own any property acquired during the marriage but they can also individually own any properties acquired before the marriage or any gifts and inheritances that occurred during the marriage but have been kept separate. Community property
__________ ownership only exists for married couples. Property can be transferred if both spouses agree and the property automatically passes to the surviving spouse when one spouse dies. Tenancy by the entirety
Which of the following does not have to be paid out of your estate before distribution to your​ heirs? Outstanding debt Legal fees Estate and inheritance taxes Funeral expenses
The process of determining what your heirs will receive from your estate occurs in which step of the estate planning​ process? Step 2
The U.S. tax code allows​ ________ to transfer the entire estate to the survivor tax-​free, assuming the recipient is a U.S. citizen. an unlimited marital deduction
Your estate tax burden can be reduced by giving gifts to your heirs prior to your death. This has the effect of reducing the value of your estate and thus lowering your tax obligation. As of​ 2011, each spouse can give up to​ $________ each year to​ ________. ​14,000; as many people as you like
The unified tax credit Essentially nullifies the taxes on the first​ $5.49 million of an estate.
Probate is the legal process of distributing an​ estate’s assets. True
We may prepare a​ ________ to appoint someone to legally act on our behalf in the event we become mentally incapacitated and a​ ________ to state our wishes in the event of a terminal illness or injury. durable power of​ attorney; living will
The individual you name who will care for your minor aged children is known as their guardian.
An individual who is responsible for carrying out the provisions of your will and managing your property until the estate is passed on to your heirs is called the executor.
In most​ states, community property is recognized and trumps any allocations in your will. False
One in 10 American adults who do not have any elements of an estate plan in place say that they​ haven’t created a plan because they​ don’t want to think about dying or becoming incapacitated. False
A legal entity in which you control the assets and can receive​ income, but also have the option to leave or remove​ assets, is called​ a(n) revocable living trust.
The legal procedure that establishes the validity of a​ will, and then distributes the assets of the estate including the payment of any​ taxes, is called probate.
The unified tax credit effectively nullifies the taxes on the first​ $5.49 million of​ one’s estate. True
What​ is/are advantage(s) to establishing a​ trust? Trusts can be used to shelter assets from estate taxes.Trusts can ensure that children from a previous marriage will receive some inheritance.A trust does not become a matter of public​ record, so it offers confidentiality.Trusts bypass probate.

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