Estate Planning
Core Estate Planning Tools
Estate planning arranges the transfer of assets at death and during life. Candidates must understand wills, trusts, powers of attorney, beneficiary designations, and titling. Know the difference between probate and non-probate assets: jointly held property, accounts with beneficiary designations, and trust assets generally pass outside probate. Understand the roles of executor, trustee, guardian, and agent.
Trusts and Transfer Taxes
Know the basic trust structure: grantor, trustee, beneficiary. Understand revocable versus irrevocable trusts, and that irrevocable trusts remove assets from the estate but surrender control. Understand the marital deduction, charitable deduction, annual exclusion gifts, and the unified credit concept. Know that basis and step-up at death interact with lifetime gifting decisions.
Traps in Exam Questions
The most common trap is a client with a will that conflicts with beneficiary designations; the designation controls for those accounts. Another trap is assuming a revocable trust saves income tax; it generally does not. Watch for questions about powers of attorney ending at death, guardianship nominations for minors, and the difference between a health care directive and a financial power of attorney. Also watch for the assumption that an outdated beneficiary form reflects current intent.
Worked Example
A client's will leaves everything to two children equally, but a retirement account still names a former spouse as beneficiary. At death, the retirement account passes to the former spouse by designation, not to the children under the will. The planner's recommendation is to review and update all beneficiary designations and titling to align with the estate plan, and to document the review.
Rule of Thumb
Beneficiary designations and titling override the will; audit them every planning cycle.