Download final-302-0812

1. The wealth you accumulate over your lifetime less any debts you owe is your estate.
A) True
B) False
2. It is crucial in estate planning to plan the transfer of ownership of your assets.
A) True
B) False
3. Probate is a court procedure to distribute assets of an estate.
A) True
B) False
4. All property included in an estate must go through probate.
A) True
B) False
5. Covered calls means
A) I own 100 shares of the call I wrote
B) I don’t own 100 shares of the call I wrote
6. Naked calls writing
A) I own 100 shares of the call I wrote
B) I don’t own 100 shares of the call I wrote
7. Legal heirs to an estate are defined by the federal government.
A) True
B) False
8. A will is a written document that directs the disposition of assets after death.
A) True
B) False
9. A person who inherits or is entitled by law or by the terms of a will to inherit some asset
is called an heir.
A) True
B) False
Page 1
10. When one dies without a will, the judge who probates the estate has control over the
distribution of property.
A) True
B) False
11. Derivatives derive their value based on an underlying security.
A) True
B) False
12. If you buy a call, you are betting the stock will go past the strike price you wrote the call
for
A) True
B) False
13. A beneficiary is a person or organization designate to receive a benefit, such as an IRA
or 401(k) plan.
A) True
B) False
14. A 401k plan is named after the tax code of the IRS that states what a employee
sponsored retirement plan can be
A) True
B) False
15. Property owned in joint tenancy with right of survivorship is distributed through
probate.
A) True
B) False
16. The partnership theory of marriage rights is the basis for the presumed intent of wedded
couples to share their fortunes equally.
A) True
B) False
17. If you write a call, you are betting the stock will go past the strike price you wrote the
call for
A) True
B) False
Page 2
18. Most retirement accounts at work have __________ as the main investment choice
A) Stocks
B) Mutual funds
19. An irrevocable trust cannot be changed or undone by the grantor during his or her
lifetime.
A) True
B) False
20. In community property states, all property owned by spouses is jointly owned by the
spouses, no matter how it was acquired.
A) True
B) False
21. If you buy a put, you are betting the stock will go up in value
A) True
B) False
22. The airline industry would most likely purchase what future contract
A) Jet fuel
B) Gasoline
23. A health care proxy is a legal document in which an individual designates another
person to make health care decisions if the individual is rendered incapable of making
his or her wishes known.
A) True
B) False
24. A living will is a written statement indicating that its signer does not wish extraordinary
medical measures to be taken if he or she has no reasonable expectation of recovery
from a desperate medical problem.
A) True
B) False
Page 3
25. Purchasing a futures contract helps determine your future cost of the item you
purchased.
A) True
B) False
26. You should have at least ____% of your pre-retirement income once you retire
A) 25%
B) 70%+
27. When planning your retirement income, it is wise to include expected Social Security
contributions
A) True
B) False
28. In states with community property laws, the law assumes that the surviving spouse owns
everything that both partners earned during the marriage.
A) True
B) False
29. A Roth IRA is free of any taxes since it is not deductible
A) True
B) False
30. Surviving relatives have an obligation to repay the decedent’s creditors for debts that
exceed the assets of the estate.
A) True
B) False
31. Trusts can be used to transfer assets outside of probate.
A) True
B) False
32. The proceeds of life insurance, if payable to the estate of the deceased, are included in
one’s estate, and the beneficiary of the policy must pay income taxes on the life
insurance proceeds.
A) True
B) False
Page 4
33. The proceeds of a life insurance policy are included in a person’s estate for federal
estate taxes purposes if the deceased, while alive, retained any ownership interest.
A) True
B) False
34. Divorce terminates an ex-spouse’s status as the named beneficiary of a retirement plan
or a life insurance policy.
A) True
B) False
35. Major changes in a will may be made with a codicil.
A) True
B) False
36. A testamentary trust becomes effective upon the death of the beneficiary.
A) True
B) False
37. A durable power of attorney gives the designated person virtually absolute power to
manage your financial affairs.
A) True
B) False
38. A special power of attorney gives the designated person virtually absolute power to
manage your financial affairs.
A) True
B) False
39. All 401K and 403bs are always matched by employer’s contributions
A) True
B) False
40. The marital deduction allows an estate to pass on an unlimited amount of assets to a
surviving spouse free of estate taxes.
A) True
B) False
Page 5
41. _____ comprises the arrangements you make during your lifetime for the administration
and transfer of your worldly possessions and assets after your death.
A) Probate court
B) A will
C) Estate planning
D) A codicil
42. A self-directed traditional IRA has all the following benefits except
A) Tax deductible
B) Your choice of investments ( based on what the brokerage firm offers)
C) You never have to pay taxes on the money once you use it
D) You can put up to a set amount each year in it
43. Some states have passed laws that allow parents to set aside money in a trust
specifically for the benefit of a disabled child or adult while letting him or her retain all
public benefits, like Medicaid or welfare. This kind of trust is called a(n) __________
trust.
A) irrevocable living
B) charitable remainder
C) special needs
D) testamentary
44. Which of the following would be considered an estate planning mistake?
A) Having a will
B) Having a signed medical power of attorney
C) Choosing an executor based on emotional ties.
D) Having a legal guardian appointed for each of your children
45. The trustor gives up the following right(s) under an irrevocable living trust:
A) Control of the property
B) Change of the beneficiaries
C) Change of the trustees
D) All of these
46. The initial step in estate planning is to
A) make a will.
B) inventory everything you own and owe.
C) contact a lawyer.
D) appoint a guardian.
Page 6
47. The __________ IRA does not allow for a deduction
A) 401k
B) Roth
C) traditional
D) Retirement
48. Which probate property goes through a court-supervised transfer of a decedent's assets?
A) The probate estate
B) Assets transferred by contract
C) Assets transferred by operation of law
D) Life insurance estate
49. When one dies without a will, this is called dying
A) escheat.
B) intestate.
C) testate.
D) probate.
50. The right of escheat gives a deceased's property to the
A) surviving spouse.
B) children.
C) parents.
D) state of residence.
51. An expense that you will have in retirement that you may not have now is
A) Food
B) Car insurance
C) Medical Insurance
D) Flood Insurance
52. Which of the following transfers assets by operation of law?
A) Wills
B) Joint tenancy with right of survivorship
C) Trusts
D) Retirement plans
Page 7
53. The average retirement account for a person age 55 or over is ( based on a report form
Vanguard)
A) $25,000
B) $55,000
C) $75,000
D) $125,000
54. Retirement planning
A) Takes luck
B) Takes discipline
C) Is not important
D) Is done by the company you work for
55. A(n) _____ is created under the terms of a will and becomes effective on the death of
the grantor according to the terms of the grantor's will or revocable living trust.
A) testamentary trust
B) advanced directive
C) power of attorney
D) escheat
56. A _____ is designed to take effect only when the grantor is unable to manage his or her
own financial affairs owing to incapacitation.
A) letter of last instructions
B) power of attorney
C) durable power of attorney
D) trust
57. A legal document that directs life support measures, such as a respirator, to be removed
is called a
A) letter of last instructions.
B) health care power of attorney.
C) durable power of attorney.
D) living will.
58. 4% rule
A) A rule in retirement that says only take out 4% of your asset value each year
B) Is the expected rate of return on your account prior to retirement
C) Doubles money every 5 years
D) Is the percentage of assets a lawyer gets for writing a will
Page 8
59. Estates worth more than _____ are subject to estate taxes.
A) $500,000
B) $250,000
C) $1,500,000
D) $2,000,000
60. Collectibles include all of the following except
A) Stamps
B) Sports memorabilia
C) Comic Books
D) Bonds
Page 9