Practice Exam

1. Which of the following most closely describes the role of the executor?

Maintain the integrity of the estate, follow the direction in the Will, gather and maintain all assets, pay taxes and bills, and eventually disburse the assets and provide a final accounting.

Plan the funeral, meet with family members, gain consensus on what should be done, pay all bills and taxes from whatever is left in the estate and file a final tax return.

Follow the direction in the Will to the best of the executor's ability, ensuring all family members are satisfied, pay for the funeral, then taxes and other bills if there are sufficient funds.

Gather, maintain and liquidate all assets for equal distribution among heirs, pay bills owing up to the date of death and notify CRA that the decedent has passed.

Please select your answer.
2. What steps should an executor follow when funds are sufficient to pay taxes and debts, but insufficient to meet the direction of the will?

Pay the taxes and debts, and then pay the heirs equal portions of the remaining funds.

Follow their conscience regarding what sequence of payments they believe the testator would have wanted for the various bequests.

Pay the heirs as directed by the Will, and see if the creditors bother trying to come after a penniless estate.

Follow the regulations regarding the sequence of payments, based on types of bequests.

Please select your answer.
3. Samantha wants to minimize probate fees on a valuable recreational property, so she considers putting it in joint tenancy ownership with her son, Karl. Which of the following issues would not be an important factor in her decision?

The transfer of ownership would be a deemed disposition which could cause immediate taxation if the property had increased in value since she acquired it.

She would have to register the change with the local land registry office and they might figure out what she was up to.

If her son declared bankruptcy the creditors could come after the property.

If her son went through a divorce, his share of the property would be part of the division of assets and could result in the need to put a mortgage on the property for up to 25% of the current value.

Please select your answer.
4. Brian passed away leaving his estate to his three children, Billy, Barb, and Becky, per stirpes. Billy and Barb, still living, had no children, while Becky predeceased her father leaving three children. What portion of their grandfather's estate will each of Becky's children receive?

1/5th

1/3rd

1/9th

None

Please select your answer.
5. Which of the following statements regarding the difference between selling a home normally, and selling a home which forms part of an estate, is false?

In a normal sale, the costs of maintenance, utilities and taxes have no effect on the net return. They are simply expenses associated with living in the home.

In a normal sale, because the house is occupied, it tends to physically depreciate, meaning it becomes worn down, and gathers more dust, spider webs, dirt and rodents.

In an estate sale, the costs of maintenance, utilities and taxes and every other cost incurred before the sale, is a sunk cost, reducing the net return of the property.

In an estate sale, because the house is vacant, it tends to physically depreciate, meaning it becomes worn down, and gathers more dust, spider webs, dirt and rodents.

Please select your answer.
6. Which of the following is a true statement regarding Wills and marriage?

In most jurisdictions, marriage revokes an existing Will, unless that Will was drafted in contemplation of marriage.

In most jurisdictions, marriage has no bearing on an existing Will, but it should obviously be updated as soon as possible.

In most jurisdictions, marriage revokes an existing Will, unless that Will was signed less than one year from the date of marriage.

In most jurisdictions, marriage has no bearing on an existing Will, since the various provincial and territorial Family Law Acts govern distribution of spousal assets anyway.

Please select your answer.
7. When someone dies, in addition to filing the deceased's final tax return, the executor may choose to file up to three "optional returns". Which of the following is not an advantage of filing one or more optional returns?

The income on each return filed is subject to its own set of graduated tax brackets.

Among other tax deductions, the basic personal amount can be claimed in full on all returns.

Multiple returns simplify each one and make them easier to prepare yourself.

Tax can be reduced or even eliminated for the year of death

Please select your answer.
Interesting statistic

Canadians who actually thought winding up an estate could be completed in less than six months: 38%

Source: CIBC Poll