8 Ways to Avoid Probate

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8 Ways to

Avoid Probate

#7670A

EXAM MATERIAL

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7670A Final Exam • 1

8 WAYS TO AVOID PROBATE (COURSE #7670A)

COURSE DESCRIPTION

This course offers easy and effective ways to skip the probate process so that property goes directly to the intended beneficiaries and avoids costly and time-consuming court proceedings. You’ll learn how to create a savvy estate plan and find out more about utilizing a living trust. It will address naming payable-on-death beneficiaries for financial accounts and the right beneficiaries for IRAs, 401 (k)s, and other retirement plans.

It will also touch on when you should own property jointly, leave real estate with transfer-on-death deeds, and provide you with procedures to follow for small estates. No prerequisites. Course level: Basic. Course #7670A – 6 CPE hours.

LEARNING ASSIGNMENTS AND OBJECTIVES

As a result of studying each assignment, you should be able to meet the objectives listed below each individual assignment.

ASSIGNMENT 1: SUBJECT Introduction

Set Up Payable-on-Death Accounts

Name a Beneficiary for Your Retirement Accounts Study the course materials from pages 1 to 46

Complete the review questions at the end of each chapter Answer the exam questions 1 to 9

Objectives:

• To identify the specifics of probate

• To recognize the intricacies of POD accounts

• To identify the options for naming beneficiaries for retirement accounts

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2 • 7670A Final Exam

ASSIGNMENT 2: SUBJECT

Name a Beneficiary for Your Stocks and Bonds Name a Beneficiary for Your Vehicles

Name a Beneficiary for Your Real Estate Study the course materials from pages 47 to 86

Objectives:

• To identify the options for naming beneficiaries for stocks and bonds

• To identify the options for naming beneficiaries for vehicles

• To identify the options for naming beneficiaries for real estate

Hold Property In Joint Ownership Create a Living Trust

Study the course materials from pages 87 to 134

Objectives:

• To recognize the nuances of taking title as joint owners

• To identify how a will is different from a living trust

Take Advantage of Special Procedures for Small Estates Make Gifts

Putting it All Together

Study the course materials from pages 135 to 172

Objectives:

• To recognize the benefits of affidavits and the simplified probate process

• To identify the rules regarding the gift tax

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7670A Final Exam • 3 ASSIGNMENT 5:

• Complete the Answer Sheet and Course Evaluation and submit to PES

NOTICE

This course and test have been adapted from supplemental materials utilizing the full text of 8 Ways to Avoid Probate, written by Mary Randolph © 2020 by Mary Randolph and Nolo. Reprinted with permission from Nolo, which owns the copyrights. The course information, learning objectives, review questions and review answers are written by PES which owns the copyright, thereto.

Use of these materials or services provided by Professional Education Services, LP (“PES”) is governed by the Terms and Conditions on PES’ website (www.mypescpe.com). PES provides this course with the understanding that it is not providing any accounting, legal, or other professional advice and assumes no liability whatsoever in connection with its use. PES has used diligent efforts to provide quality information and material to its customers, but does not warrant or guarantee the accuracy, timeliness, completeness, or currency of the information contained herein. Ultimately, the responsibility to comply with applicable legal requirements falls solely on the individual licensee, not PES. PES encourages you to contact your state Board or licensing agency for the latest information and to confirm or clarify any questions or concerns you have regarding your duties or obligations as a licensed professional.

© Professional Education Services, LP 2020 Program Publication Date 9/26/2020

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8 WAYS TO AVOID PROBATE (COURSE #7670A)

EXAM INFORMATION

COURSE EXPIRATION DATE: Per AICPA and NASBA standards, this course must be completed within ONE YEAR from the date of purchase.

TEST FORMAT: The following final exam, consisting of 30 multiple choice questions, is based specifically on the material included in this course. The answer sheet must be completed and returned to PES for CPE certification.

You will find the answer sheet at the back of this exam packet so that you may easily remove it and use it while taking your test.

LICENSE RENEWAL INFORMATION: The 8 Ways to Avoid Probate course (#7670A) qualifies for 6 CPE hours.

PROCESSING: You must score 70% or better to pass. If you mail or fax your exam, when you pass, your Certificate of Completion will be mailed. If you do not pass, we will give you a courtesy call to inform you of this.

When completing your exam online, grading is instantaneous. Upon achieving a passing score, the completion certificate is immediately available in your account under “My Completed CPE.” Please note: failed exams may be retaken. Per NASBA and AICPA guidelines, missed questions cannot be indicated until after you pass.

GRADING OPTIONS – Please choose only ONE of the following:

GRADING OPTIONS: Please choose only ONE of the following. If mailing or faxing, make sure to fill out your Answer Sheet completely prior to submitting it.

• ONLINE GRADING –Visit our website at http://www.mypescpe.com. Login to your account (if you are a first-time user, you must set up a new user account). Click on the course title of the exam you wish to take. Once all answers have been selected, click the “Submit/Grade Answers”

button at the bottom of the page for instant grading and certification. If you do not see the exam listed, click on “My CPE in Progress.” Click on the “Add Exam to Account” button and follow the instructions.

• MAIL – Your exam will be graded and your certificate of completion mailed to you within one business day. Your certificate will be dated according to the postmark date. Please mail your Answer Sheet to:

Professional Education Services, LP 4208 Douglas Blvd., Ste 50

Granite Bay, CA 95746

• FAX – Your exam will be graded and you will be contacted either via phone or fax with your results within 4 business hours of receipt. A copy of your graded exam and certificate of completion will be mailed to you. Your certificate will be dated according to the fax date. If you choose to fax your exam, please do not mail it. Your fax will serve as the original. Please refer to the attached answer sheet for further instructions on fax grading. Fax number (916) 791-4099.

THANK YOU FOR USING PROFESSIONAL EDUCATION SERVICES.

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8 WAYS TO AVOID PROBATE (COURSE #7670A) – FINAL EXAM

The following questions are multiple choice. Please indicate your choice on the enclosed Answer Sheet.

1. Which of the following is correct regarding probate:

A. a valid will is required for probate

B. the probate process typically takes between two to three years to complete

C. probate requires an accurate inventory of the deceased’s property and all creditors and relatives are notified

D. all of the above

2. Which of the following is correct regarding payable-on-death (POD) bank accounts:

A. a POD account is difficult to create B. once created, a POD account cannot be

altered

C. POD accounts are sometimes referred to as Totten trusts

D. POD accounts are used as part of the probate process

3. Which of the following is correct regarding a POD designation on a joint account with a right of survivorship:

A. when the first owner of the joint account dies, the co-owner will receive the funds after the probate process is complete

B. adding a POD beneficiary to a joint account is useful when planning for the unlikely event that both owners of the joint account die simultaneously

C. once a POD beneficiary is named, they cannot be removed without a legal proceeding

D. adding a POD beneficiary to a joint account does not avoid the probate process

4. A checking account at a financial institution in which both a son and daughter are listed as POD beneficiaries is insured by the FDIC up to which of the following amounts:

A. $250,000 B. $500,000 C. $1 million D. $1.5 million

5. Which of the following is correct regarding POD accounts with multiple beneficiaries:

A. if one of the beneficiaries dies before the account holder, the money goes to the remaining beneficiaries

B. the account holder should name an

alternate payee, in case the first choice of a beneficiary outlives the account holder C. account holders should rank their POD

beneficiaries

D. multiple POD beneficiaries are not allowed in most states

6. Which of the following is correct regarding naming a spouse as a beneficiary for a 401(k) plan:

A. a written, notarized agreement is required to name a spouse as a beneficiary

B. an individual may bypass their spouse’s ability to inherit all of the money in a 401(k) plan by simply naming a different beneficiary on the form that they receive from their employer

C. the U.S. Supreme Court ruled that states maintained the right to automatically revoke an ex-spouse’s right to inherit a 401(k) plan D. a prenuptial agreement is not sufficient for

a spouse to waive their rights to inherit a 401(k) plan

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7. Which of the following is not a community property state:

A. Vermont B. Nevada C. Alaska D. California

8. Naming which of the following as a beneficiary of a retirement account generally guarantees that the money will have to go through probate before it is distributed:

A. multiple beneficiaries that are not related to you

B. a custodian for a minor child C. your spouse

D. your estate

9. If an individual does not make a legally required retirement account withdrawal, they will be assessed with a ___________________

on the amount that should have been withdrawn but was not.

A. 25 percent tax B. 33 percent tax C. 50 percent tax D. 66 percent tax

10. Which of the following is correct regarding transfer-on-death (TOD) registration of stocks and bonds:

A. all 50 states allow for TOD registration of stocks and bonds

B. after completing a TOD registration, the beneficiary has the right to sell the stock C. TOD registration is very much like a payable-

on-death (POD) bank account

D. once a TOD beneficiary inherits the stocks, they are legally prohibited from selling them for a period of six months

11. What is the term used for the percentage of a deceased spouse’s property that may be claimed by a surviving spouse in a noncommunity property state:

A. a mandatory inheritance percentage B. a statutory share

C. a noncommunity percentage D. a spousal stipend

12. For which of the following government securities might a TOD beneficiary be named:

A. Treasury bills B. U.S. savings bonds C. Treasury notes D. all of the above

13. Many states offer the ability to name a beneficiary for a vehicle on which of the following documents:

A. on the vehicle’s insurance policy B. on the car title

C. on the driver’s license D. on the vehicle’s registration

14. All of the following are allowable methods to revoke a beneficiary designation on a vehicle except:

A. leaving the car to someone else in a will B. selling the car

C. applying for a new certificate of ownership that names no beneficiary

D. applying for a new certificate of ownership that names a different beneficiary

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7670A Final Exam • 9 15. Which of the following is correct regarding

transferring a vehicle’s title to a TOD beneficiary after the owner has died:

A. once the car has gone through the probate process, the TOD beneficiary receives legal ownership

B. a death certificate is usually required to re- title the vehicle in the beneficiary’s name C. the title transfer may occur at any time after

the owner’s death

D. if the vehicle’s owner still owed money on the car, the TOD beneficiary is not legally obligated to repay that debt

16. Which of the following is correct regarding TOD deeds:

A. the use of TOD deeds is legal in all 50 states B. you are limited to naming one beneficiary in

a TOD deed

C. the beneficiary of a TOD deed does not need to be notified of their beneficiary status

D. any mortgage or debt obligation dies with the owner and is not the responsibility of the beneficiary

17. Which of the following is a drawback of using a TOD deed:

A. the use of a TOD deed may impact Medicaid benefit eligibility

B. the use of a TOD deed negates the ability to quickly sell a house after the owner has died C. both A and B are correct

D. neither A nor B are correct

18. Which of the following is the only state that requires each co-owner of property to make a separate TOD deed, leaving just his or her share of ownership to a designated beneficiary:

A. New York B. Oregon

C. Massachusetts D. California

19. Which of the following is not an acceptable way to cancel a TOD deed:

A. sign a document revoking the TOD deed and record it just like you recorded the original TOD deed

B. use your will to revoke the TOD deed C. transfer the property to someone else D. record a new TOD deed naming a new

beneficiary

20. The use of which of the following joint ownership methods avoids the need for probate:

A. joint tenancy with right of survivorship B. a partnership

C. tenancy in common

D. community property with no right of survivorship

21. Which of the following is the most popular probate-avoidance device:

A. joint tenancy B. partnerships

C. tenancy by the entirety D. community property

22. Which of the following alternatives to joint ownership is the most flexible alternative for real estate:

A. a durable power of attorney

B. a payable-on-death designation on an escrow account

C. a living trust for real estate

D. a transfer-on-death deed for real estate

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23. Which of the following is correct regarding living trusts:

A. the transfer of ownership to the trustee may be a verbal agreement

B. the successor trustee becomes the legal owner of the trust property when a living trust is created

C. revocable living trusts avoid probate D. a drawback to a living trust is that once

property has been added to the trust, it cannot be refinanced unless the trust is revoked

24. Which of the following is correct regarding wills:

A. having a living trust makes writing a will unnecessary

B. a will cannot be used to forgive a debt that is owed to you

C. a pour-over will avoids the need for probate D. wills must be used in many states in order for

parents to name a guardian for their children in case the parents should die before the children reach adulthood

25. Which of the following items would typically require changing the title document in order to properly transfer it to a trust:

A. jewelry B. mutual funds C. furniture D. appliances

26. Many states exclude the value of which of the following assets when determining whether an estate is considered “small” enough to forego the probate process:

A. real estate B. motor vehicles

C. real estate located in another state D. all of the above

27. Which of the following is correct regarding claiming property with affidavits:

A. there is usually a waiting period of 30 days or so before anyone is allowed to collect property

B. the affidavit procedure is a part of the probate process

C. all the states limit the use of the affidavit procedure to estates that are valued at less than $100,000

D. inheritors can only use an affidavit to collect property in cases where the deceased did not create a will

28. Currently, the gift tax applies on individuals that gave away more than ______________ in taxable gifts during their life.

A. $1 million B. $6.87 million C. $11.58 million D. $18.99 million

29. Which of the following payments to a qualifying education organization would be exempt from the federal gift tax:

A. a payment for housing on campus

B. a payment for tuition at a correspondence school

C. reimbursing your niece for the cost of her tuition

D. a direct payment to the college for the cost of tuition

30. Which of the following is the only state to not adopt the Uniform Transfers to Minors Act:

A. Delaware B. South Carolina C. North Dakota D. Alabama

Congratulations – you’ve completed the exam!

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8 WAYS TO AVOID PROBATE #7670A (6 CPE HOURS) –

ANSWER SHEET (9/20)

IMPORTANT NOTE: For certification, this answer sheet must be completed and submitted to PES for grading within ONE YEAR from the date of purchase. Please use BLACK INK and PRINT for quicker processing – thank you.

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Please complete the attached course evaluation - your opinion is extremely valuable!

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8 WAYS TO AVOID PROBATE #7670A - COURSE EVALUATION

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