Quiz: Test Your Estate-Planning Smarts

Money Retirement iStock / Getty Images Quiz: Test Your Estate-Planning Smarts

See what you know about wills, trusts and powers of attorney

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Quiz: Test Your Estate-Planning Smarts 0 100 0 [ { "question" : "

Only wealthier families with a high net worth need a will.

"multiSelect" : false, "explanation" : "

If you want control over what happens to your assets when you die, you’ll need a will to name who gets what. If you die without a will, state law determines which of your relatives will

inherit from you.

Tax planning is an important part of estate planning. What’s the amount of an estate that a person may leave to their heirs without owing any federal estate tax?

"answer" : "$3.5 million for individuals", "correctAnswer" : false }, { "answer" : "$10.45 million for individuals", "correctAnswer" : false }, { "answer" : "$11.58 million for individuals",

"correctAnswer" : true }, { "answer" : "None of the above", "correctAnswer" : false } ], "multiSelect" : false, "explanation" : "

This is the exclusion amount for individuals in 2020; the amount doubles for couples. And when a spouse dies, any unused estate tax exclusion amount rolls over to the surviving

spouse.

How much money can you give away in 2020 to another tax-free to reduce your estate?

"correctAnswer" : true }, { "answer" : "$18,000 annual max per person; $36,000 per recipient if given as a couple", "correctAnswer" : false }, { "answer" : "$22,000 annual max per person;

$44,000 per recipient if given as a couple", "correctAnswer" : false }, { "answer" : "None of the above", "correctAnswer" : false } ], "multiSelect" : false, "explanation" : "

You also may pay an unlimited amount of someone’s medical and education bills without triggering the gift tax, as long as you make the payments directly to the institutions where those

charges were incurred.

What is typically in a will?

"answer" : "B. Instructions for how debt, expenses and taxes will be paid", "correctAnswer" : false }, { "answer" : "C. Directions involving how assets will be distributed", "correctAnswer"

: false }, { "answer" : "D. All of the above", "correctAnswer" : true } ], "multiSelect" : false, "explanation" : "

Among other things, wills also may name a caretaker for a pet and serve as a backup to a revocable living trust.

"questionImgCredit" : ""}, { "question" : "

What is a revocable living trust?

"correctAnswer" : false }, { "answer" : "An agreement that could be used instead of powers of attorney after your death if it’s worded properly.", "correctAnswer" : false }, { "answer" : "A

document you can change as your circumstances or wishes change", "correctAnswer" : false }, { "answer" : "All of the above", "correctAnswer" : true } ], "multiSelect" : false, "explanation"

: "

At the time of a person’s death, assets held in a revocable living trust will pass directly to the beneficiaries named in the trust agreement and will avoid the probate process in most

states.

What are some differences between a will and a revocable living trust?

name someone to manage your property if you're incapacitated, and/or distribute the property after you die.", "correctAnswer" : false }, { "answer" : "A will is not made official until the

person dies, a probate proceeding is filed and an executor is appointed.", "correctAnswer" : false }, { "answer" : "B and C.", "correctAnswer" : true } ], "multiSelect" : false,

"explanation" : "

A trust requires you to revise title documents by transferring ownership of the property you want to place in it. A trust also keeps private the details of your assets and who inherited

what. A will that has been probated becomes a public record. For most estates with jointly owned assets or life insurance, pensions or retirement funds with named beneficiaries, a will is a

less expensive alternative.

What is an irrevocable living trust?

and provides for family members who are minors, have special needs or have financial issues.", "correctAnswer" : false }, { "answer" : "An arrangement that transfers property to a trust

while the grantor is alive, thus potentially avoiding probate and estate taxes.", "correctAnswer" : false }, { "answer" : "All of the above", "correctAnswer" : true } ], "multiSelect" :

false, "explanation" : "

If you have second thoughts about who should be a beneficiary or trustee of the trust, you can’t modify the terms like you’d be able to in a revocable living trust unless it’s written in

such a way that allows the terms to be changed under specific limited circumstances. However, there are considerable tax advantages to setting up an irrevocable living trust for

high-net-worth families.

What is a living will?

"answer" : " A written statement that tells physicians who you want to make health decisions on your behalf", "correctAnswer" : false }, { "answer" : " A document that details how you want

to leave assets to beneficiaries", "correctAnswer" : false }, { "answer" : "None of the above.", "correctAnswer" : false } ], "multiSelect" : false, "explanation" : "

A living will, also called an advanced directive, is recommended for people who want to make life-and-death decisions in advance about their care in the event that they can’t make decisions

on their own. Physicians and other providers are legally obligated to comply with a directive when a patient is near death or in a permanent coma and unable to direct his or her own

care.

How do living wills and durable health care powers of attorney differ?

faced with death.", "correctAnswer" : false }, { "answer" : "A durable power of attorney goes beyond a living will and can include care if a person develops a serious condition.",

"correctAnswer" : false }, { "answer" : "A health care power of attorney delegates a trusted person, or agent, to make health care decisions on your behalf if you’re unable to do so.",

"correctAnswer" : false }, { "answer" : "All of the above", "correctAnswer" : true } ], "multiSelect" : false, "explanation" : "

Living wills only apply to decisions involving life-sustaining treatment. In a health care power of attorney, by contrast, decisions can cover routine care if a person becomes unable to make

those decisions.

A durable power of attorney for finances is:

make decisions for yourself", "correctAnswer" : false }, { "answer" : "A legal agreement that allows your agent to make decisions over your financial affairs without having to go to court to

ask for that authority", "correctAnswer" : false }, { "answer" : "A legal document allowing your agent to pay your expenses and handle other financial transactions with your assets",

"correctAnswer" : false }, { "answer" : "All of the above", "correctAnswer" : true } ], "multiSelect" : false, "explanation" : "

Your agent doesn't have to be a financial expert, but should be able to manage money well. Only choose someone you trust completely and who is knowledgeable and has common sense. If

necessary, your agent can hire professionals, paying them out of your assets to help with your finances.

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