Retirement Accounts and Estate Planning

Description: This quiz is designed to test your knowledge of retirement accounts and estate planning.
Number of Questions: 15
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Tags: retirement accounts estate planning probate law
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Which of the following is NOT a type of retirement account?

  1. 401(k)

  2. IRA

  3. 403(b)

  4. 529 plan


Correct Option: D
Explanation:

A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. It is not a retirement account.

What is the maximum amount that can be contributed to a traditional IRA in 2023?

  1. $6,500

  2. $7,500

  3. $10,000

  4. $12,000


Correct Option: A
Explanation:

The maximum contribution limit for a traditional IRA in 2023 is $6,500 ($7,500 for individuals age 50 or older).

Which of the following is NOT a type of estate planning document?

  1. Will

  2. Trust

  3. Power of Attorney

  4. Living Will


Correct Option: C
Explanation:

A Power of Attorney is a legal document that gives someone the authority to act on your behalf in financial or legal matters. It is not an estate planning document.

What is the purpose of a living will?

  1. To specify your wishes for end-of-life care

  2. To appoint a guardian for your children

  3. To distribute your assets after your death

  4. To create a trust


Correct Option: A
Explanation:

A living will is a legal document that allows you to specify your wishes for end-of-life care, such as whether you want to be kept on life support or not.

Which of the following is NOT a type of trust?

  1. Revocable trust

  2. Irrevocable trust

  3. Living trust

  4. Testamentary trust


Correct Option: C
Explanation:

A living trust is not a type of trust. It is a legal arrangement in which you transfer assets to a trust during your lifetime, rather than after your death.

What is the difference between a will and a trust?

  1. A will is legally binding, while a trust is not

  2. A trust is more expensive to create than a will

  3. A will can be changed at any time, while a trust cannot

  4. A trust distributes assets after your death, while a will does not


Correct Option: D
Explanation:

A will is a legal document that distributes your assets after your death. A trust is a legal arrangement in which you transfer assets to a trust during your lifetime, rather than after your death.

What is the purpose of a probate court?

  1. To administer the estate of a deceased person

  2. To appoint a guardian for a minor child

  3. To resolve disputes between heirs

  4. To create a trust


Correct Option: A
Explanation:

A probate court is a court that administers the estate of a deceased person. This includes gathering the assets of the estate, paying off any debts, and distributing the remaining assets to the heirs.

Which of the following is NOT a benefit of having a will?

  1. It ensures that your assets will be distributed according to your wishes

  2. It can help to avoid probate

  3. It can reduce estate taxes

  4. It can help to protect your minor children


Correct Option: C
Explanation:

Having a will does not reduce estate taxes. Estate taxes are imposed on the value of your estate after your death. The amount of estate taxes you owe depends on the value of your estate and the applicable estate tax laws.

What is the difference between an executor and an administrator?

  1. An executor is appointed by the court, while an administrator is appointed by the heirs

  2. An executor is responsible for managing the estate, while an administrator is responsible for distributing the assets

  3. An executor is paid a fee, while an administrator is not

  4. An executor can be a family member or friend, while an administrator must be a professional


Correct Option: A
Explanation:

An executor is appointed by the court to manage the estate of a deceased person. An administrator is appointed by the heirs if there is no will or if the will does not name an executor.

What is the purpose of an estate plan?

  1. To ensure that your assets will be distributed according to your wishes

  2. To avoid probate

  3. To reduce estate taxes

  4. To protect your minor children


Correct Option:
Explanation:

An estate plan is a set of legal documents that allows you to control what happens to your assets after your death. It can also help to avoid probate, reduce estate taxes, and protect your minor children.

Which of the following is NOT a type of retirement account?

  1. 401(k)

  2. IRA

  3. 403(b)

  4. 529 plan


Correct Option: D
Explanation:

A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. It is not a retirement account.

What is the maximum amount that can be contributed to a traditional IRA in 2023?

  1. $6,500

  2. $7,500

  3. $10,000

  4. $12,000


Correct Option: A
Explanation:

The maximum contribution limit for a traditional IRA in 2023 is $6,500 ($7,500 for individuals age 50 or older).

Which of the following is NOT a type of estate planning document?

  1. Will

  2. Trust

  3. Power of Attorney

  4. Living Will


Correct Option: C
Explanation:

A Power of Attorney is a legal document that gives someone the authority to act on your behalf in financial or legal matters. It is not an estate planning document.

What is the purpose of a living will?

  1. To specify your wishes for end-of-life care

  2. To appoint a guardian for your children

  3. To distribute your assets after your death

  4. To create a trust


Correct Option: A
Explanation:

A living will is a legal document that allows you to specify your wishes for end-of-life care, such as whether you want to be kept on life support or not.

Which of the following is NOT a type of trust?

  1. Revocable trust

  2. Irrevocable trust

  3. Living trust

  4. Testamentary trust


Correct Option: C
Explanation:

A living trust is not a type of trust. It is a legal arrangement in which you transfer assets to a trust during your lifetime, rather than after your death.

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