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?
making sure your assets go to the people you want them to after you die
protecting your physical property from the government after you die
establishing a life insurance plan to ensure that your family is provided for after you die
When does estate planning take effect?
upon death or incapacitation
only upon death
whenever you want it to
In addition to a will, what else is a common element of an estate plan?
an assignment of power of attorney
a tax-free bank account
a burial plot
What is a health care proxy?
a legal document that appoints someone to make decisions about your health care if you are unable to do so
a person who will receive the pay out of your remaining health insurance
a public hospital
What is a benefit of a trust over a will?
It does not need to be processed in court.
It is entirely tax free.
It is more comprehensive.
In the term "last will and testament," what were the original meanings of "will" and "testament?"
real estate and personal property, respectively
property and personal wishes, respectively
transfers to individuals and to organizations, respectively
In addition to the distribution of your assets, what else is a good use for a will?
appointing guardians for young children
choosing a health care proxy
summarizing your life philosophy
What does it mean to die intestate?
dying without a will
dying in a state other than your home state
dying without any significant assets
When you give someone power of attorney, what is he or she called?
What is different about durable power of attorney?
It stays in effect even if you are incapacitated.
It has no time limit.
It extends beyond finances to healthcare issues as well.
What is power of attorney fraud?
misusing one's access to a different person's assets
claiming that regular power of attorney is actually durable power of attorney
forging a power of attorney form
At what size estate does a trust start making sense?
What is the typical cost of probate proceedings?
2 to 4 percent of the estate's value
$1,000 per week
a flat fee of $10,000, regardless of estate size
What three parties are involved in a trust?
grantor, trustee and beneficiary
trustee, truster and trusted
agent, trustee and executor
What is an inter vivos gift?
a tax-free gift given while you are still alive
a gift to the trustee
a gift that is set up while alive, but only is given after death, thus avoiding the gift tax