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Estate Planning and Bankruptcy

Description: Estate Planning and Bankruptcy Quiz
Number of Questions: 15
Created by:
Tags: estate planning bankruptcy law
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What is the primary purpose of estate planning?

  1. To minimize taxes on assets after death

  2. To ensure that assets are distributed according to the wishes of the deceased

  3. To protect assets from creditors

  4. To provide for the care of minor children

Show answer
Correct Option: B
Explanation:

Estate planning is the process of arranging for the transfer of assets after death in a manner that minimizes taxes and ensures that the assets are distributed according to the wishes of the deceased.

Which of the following is not a common estate planning tool?

  1. Will

  2. Trust

  3. Power of attorney

  4. Bankruptcy

Show answer
Correct Option: D
Explanation:

Bankruptcy is a legal proceeding in which a person or business is declared unable to pay their debts. It is not a common estate planning tool.

What is the difference between a will and a trust?

  1. A will takes effect after death, while a trust takes effect during life

  2. A will is revocable, while a trust is irrevocable

  3. A will distributes assets to beneficiaries outright, while a trust can provide for the management and distribution of assets over time

  4. All of the above

Show answer
Correct Option: D
Explanation:

A will takes effect after death, while a trust takes effect during life. A will is revocable, while a trust is irrevocable. A will distributes assets to beneficiaries outright, while a trust can provide for the management and distribution of assets over time.

What is the purpose of a power of attorney?

  1. To allow someone else to make financial decisions on your behalf

  2. To allow someone else to make medical decisions on your behalf

  3. To allow someone else to sell your property

  4. All of the above

Show answer
Correct Option: D
Explanation:

A power of attorney is a legal document that gives someone else the authority to make decisions on your behalf. This can include financial decisions, medical decisions, and the sale of property.

What is the difference between a Chapter 7 bankruptcy and a Chapter 13 bankruptcy?

  1. Chapter 7 bankruptcy liquidates all of the debtor's assets, while Chapter 13 bankruptcy allows the debtor to repay their debts over time

  2. Chapter 7 bankruptcy is available to individuals and businesses, while Chapter 13 bankruptcy is only available to individuals

  3. Chapter 7 bankruptcy is more expensive than Chapter 13 bankruptcy

  4. All of the above

Show answer
Correct Option: A
Explanation:

Chapter 7 bankruptcy liquidates all of the debtor's assets and distributes the proceeds to creditors. Chapter 13 bankruptcy allows the debtor to repay their debts over time through a court-approved plan.

What are the eligibility requirements for Chapter 7 bankruptcy?

  1. The debtor must have a regular income

  2. The debtor must have sufficient assets to pay off their debts

  3. The debtor must have filed a petition with the bankruptcy court

  4. None of the above

Show answer
Correct Option: D
Explanation:

There are no income or asset requirements for Chapter 7 bankruptcy. The only requirement is that the debtor must file a petition with the bankruptcy court.

What are the eligibility requirements for Chapter 13 bankruptcy?

  1. The debtor must have a regular income

  2. The debtor must have sufficient assets to pay off their debts

  3. The debtor must have filed a petition with the bankruptcy court

  4. All of the above

Show answer
Correct Option: A
Explanation:

The only eligibility requirement for Chapter 13 bankruptcy is that the debtor must have a regular income.

What is the effect of filing for bankruptcy on a person's credit score?

  1. It will lower the person's credit score

  2. It will raise the person's credit score

  3. It will have no effect on the person's credit score

  4. It depends on the type of bankruptcy

Show answer
Correct Option: A
Explanation:

Filing for bankruptcy will lower a person's credit score. The extent to which it will lower the score will depend on the type of bankruptcy and the person's credit history.

What is the effect of filing for bankruptcy on a person's ability to get a job?

  1. It will make it more difficult to get a job

  2. It will make it easier to get a job

  3. It will have no effect on the person's ability to get a job

  4. It depends on the type of job

Show answer
Correct Option: A
Explanation:

Filing for bankruptcy will make it more difficult to get a job. This is because many employers run credit checks on job applicants.

What is the effect of filing for bankruptcy on a person's ability to get a loan?

  1. It will make it more difficult to get a loan

  2. It will make it easier to get a loan

  3. It will have no effect on the person's ability to get a loan

  4. It depends on the type of loan

Show answer
Correct Option: A
Explanation:

Filing for bankruptcy will make it more difficult to get a loan. This is because lenders consider bankruptcy to be a sign of financial instability.

What is the effect of filing for bankruptcy on a person's ability to rent an apartment?

  1. It will make it more difficult to rent an apartment

  2. It will make it easier to rent an apartment

  3. It will have no effect on the person's ability to rent an apartment

  4. It depends on the landlord

Show answer
Correct Option: A
Explanation:

Filing for bankruptcy will make it more difficult to rent an apartment. This is because many landlords run credit checks on prospective tenants.

What is the effect of filing for bankruptcy on a person's ability to get a credit card?

  1. It will make it more difficult to get a credit card

  2. It will make it easier to get a credit card

  3. It will have no effect on the person's ability to get a credit card

  4. It depends on the credit card company

Show answer
Correct Option: A
Explanation:

Filing for bankruptcy will make it more difficult to get a credit card. This is because credit card companies consider bankruptcy to be a sign of financial instability.

What is the effect of filing for bankruptcy on a person's ability to get a student loan?

  1. It will make it more difficult to get a student loan

  2. It will make it easier to get a student loan

  3. It will have no effect on the person's ability to get a student loan

  4. It depends on the lender

Show answer
Correct Option: A
Explanation:

Filing for bankruptcy will make it more difficult to get a student loan. This is because lenders consider bankruptcy to be a sign of financial instability.

What is the effect of filing for bankruptcy on a person's ability to get a mortgage?

  1. It will make it more difficult to get a mortgage

  2. It will make it easier to get a mortgage

  3. It will have no effect on the person's ability to get a mortgage

  4. It depends on the lender

Show answer
Correct Option: A
Explanation:

Filing for bankruptcy will make it more difficult to get a mortgage. This is because lenders consider bankruptcy to be a sign of financial instability.

What is the effect of filing for bankruptcy on a person's ability to get a car loan?

  1. It will make it more difficult to get a car loan

  2. It will make it easier to get a car loan

  3. It will have no effect on the person's ability to get a car loan

  4. It depends on the lender

Show answer
Correct Option: A
Explanation:

Filing for bankruptcy will make it more difficult to get a car loan. This is because lenders consider bankruptcy to be a sign of financial instability.

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