ESTATE PLANNING EXAM 1 QUESTIONS WITH CORRECT VERIFIED ANSWERS |ALL GRADED A+

Ace your Estate Planning Exam 1 with the most comprehensive Q&A study guide available. Designed for CFP candidates, law students, trust and estate professionals, and AEP designees, this resource contains 150+ exam-style questions with correct verified answers and detailed rationales covering every major topic tested on Exam 1. What's Inside: Core Concepts: Estate planning defined: accumulation, management, conservation, and transfer of wealth considering legal, tax, and personal objectives. Impediments to planning: unwillingness to face mortality, procrastination, lack of knowledge. Consequences of failing to plan: unfulfilled transfer objectives, excessive taxes, insufficient liquidity. Wills & Testamentary Documents: Holographic wills (handwritten, no witnesses required). Nuncupative wills (oral dying declaration – valid in some states like Kansas within 30 days). Statutory wills (drawn by licensed attorney, complies with state laws). Mutual/reciprocal wills vs. joint wills (joint will contractually binds survivor). Codicils (amendment to will – testator must be competent each time). Revoking a will: destruction or new will with revocation clause. Will Clauses (Memorize These): Introductory clause (identifies testator, domicile, next of kin). Declaration clause (revokes all prior wills). Bequests clause (specific legacy). Residuary clause (distributes balance of estate). Guardianship clause (names guardian for minors). Attestation clause (witness signatures). Self-proving clause (notarized declaration). Distribution Methods: Per capita (assets split equally among heirs at same generational level). Per stirpes (assets distributed equally through each branch of the family). Probate: Probate estate vs. gross estate (critical distinction). Assets that pass through probate: fee simple, tenancy in common, community property, invalid beneficiary designations. Assets that avoid probate: JTWROS, tenancy by the entirety, life insurance with named beneficiary, POD/TOD accounts, revocable trusts. Advantages: clear title, creditor protection, orderly distribution. Disadvantages: time (6-24 months), costs (5-10%), loss of privacy. Property Ownership Types: Fee simple (100% in gross estate and probate estate). Tenancy in common (no survivorship – passes via probate). JTWROS (equal undivided interest – right of survivorship – contribution rule for gross estate). Tenancy by the entirety (married couples only – 50% contribution rule). Community property (step-up in basis for both halves at first spouse's death). Powers of Attorney & Appointment: Power of attorney (terminates at death of principal). Durable feature (remains in effect after incapacity). Springing power (activates upon defined event). Power of appointment (may survive death of grantor – general vs. limited). General power of appointment = inclusion in power holder's gross estate. Durable power of attorney for health care (health decisions during incapacity). Living Will & Advance Directives: Living will (directs doctors regarding life support). DNR order (avoid CPR if heart stops). Gift Tax Essentials: Annual exclusion: $14,000 per donee per year (2014) – must be present interest. Split gifts: married couples can gift $28,000 per donee (requires Form 709). Applicable exclusion amount: $5,340,000 lifetime (2014) = credit of $2,081,800. Qualified transfers: tuition paid directly to school, medical expenses paid directly to provider – unlimited exclusion. Crummey provision (creates present interest in trust). 5/5 Lapse Rule (lapse over $5,000 or 5% = taxable gift). Form 709 due April 15 following gift year. Special Situations: Forced heirship (Louisiana only). Felonious homicide statutes (prevents killer from inheriting). Anti-lapse statutes (preserves inheritance for descendants of deceased beneficiary). Divorce statutes (invalidates bequests to former spouse). Why This Guide is Different: Verified Q&A Format (ANS....) – every answer is correct and graded A+. Exam-Ready – covers exactly what appears on Estate Planning Exam 1. No Fluff – concise definitions and rules you must memorize. Quick Reference – perfect for last-minute review before the test.