#1
Which of the following is a common estate planning tool?
Living Will
ExplanationSpecifies medical treatment preferences in case of incapacity.
#2
What is a 401(k) plan, and how does it relate to retirement benefits?
An employer-sponsored retirement savings plan
ExplanationEmployer-sponsored retirement savings vehicle.
#3
What is the role of a guardian in estate planning, especially for minor children?
Supervising the overall well-being of minor children
ExplanationOversees welfare of minor children.
#4
What is a beneficiary designation in the context of retirement benefits?
Specifying who receives the retirement account upon the account owner's death
ExplanationSpecifies recipients of retirement accounts after the owner's death.
#5
What is the 'stretch IRA' concept in estate planning?
A strategy to maximize the distribution period of an inherited IRA
ExplanationMaximizes the distribution period of inherited IRAs.
#6
Which of the following is a key advantage of a revocable living trust in estate planning?
Keeping assets private and avoiding probate
ExplanationMaintains asset privacy and avoids probate process.
#7
What is the purpose of a durable power of attorney in estate planning?
Authorizing someone to make financial decisions on behalf of the principal
ExplanationGrants authority to make financial decisions on behalf of the individual.
#8
What is a testamentary trust, and when does it come into effect?
A trust created in a will and takes effect after the testator's death
ExplanationTrust created in a will, effective after the testator's death.
#9
What is the required minimum distribution (RMD) for traditional IRAs once the account owner reaches age 72?
A percentage determined by IRS life expectancy tables
ExplanationMandatory withdrawals based on IRS life expectancy tables.
#10
In estate planning, what does the term 'intestate' mean?
A person without a will
ExplanationRefers to individuals who die without a will.
#11
What role does a healthcare proxy play in estate planning?
Appointing someone to make medical decisions on behalf of the individual
ExplanationDesignates someone to make medical decisions.
#12
What is the impact of an individual having a high net worth on estate planning?
Increases the complexity and may involve additional strategies
ExplanationIntroduces complexity and additional planning strategies.
#13
What is a Qualified Personal Residence Trust (QPRT) commonly used for in estate planning?
Transferring a primary residence to heirs at a reduced gift tax cost
ExplanationTransfers primary residence with reduced gift tax.