Estate Planning Exam - CFP
(Note: Use the tab button to efficiently move through the exam!)
Name: Birthday: (xx-xx-xx) (Internal Use Only) License #: (xxxxxxx) License Renewal: (mo/yr) To receive your Certificate, please type in your e-mail address.
1. Which lapse in protocol would be the most serious for rendering a will invalid?
A. A witness is present but doesn't actually watch the testator sign the will. B. A witness leaves the room while another witness signs the will. C. A testator signs an "X" instead of his name. D. The testator allows the will to be written in a foreign language he does not speak fluently.
ABCD
2. Incident of ownership refers to:
A. Borrowing against the cash value of an insurance policy B. Granting an executor the right to retitle your property C. Passing property to a spouse in order to avoid a lawsuit D. Being part owner in a business for a very short time
3. Which item does not accurately describe an irrevocable trust?
A. It offers very little flexibility on how a grantor may change it B. It offers additional tax advantages than a revocable trust C. It stipulates that no more than one beneficiary is allowed D. It can be combined with other irrevocable trusts
4. In 2004, how large of an estate can an individual pass to heirs without paying an estate tax?
A. $1 million B. $1.5 million C. $645,000 D. $3 million
5. All but one of the following statements is true about a trust:
A. A trust does not become part of the public record. B. The trust can be named as beneficiary of life insurance policies and certain retirement accounts. C. A trust is more difficult to contest than a will. D. A trust can direct how taxes are deducted from the estate.
6. A fraudulent conveyance refers to:
A. Moving assets into a trust (or among several trusts) for the express purpose of protecting those assets from rightful claims or taxes B. The attempt a grantor makes to bestow special powers to a trustee within an irrevocable trust that may conflict with the trust's purpose C. A grantor leaving assets to a grandchild and thereby circumventing the estate tax due if the assets were first left to the child's parent D. A bequest of real estate even though the testator knew the property would have to be sold to cover the estate's insolvency
7. Which is not part of the usual probate process upon discovering a will?
A. Petitioning the court to accept the will B. Granting the spouse of the deceased an allowance C. Notification of heirs and other interested parties D. Appointment of an executor based on a named nominee
8. A testamentary trust refers to :
A. A trust created during the lifetime of a grantor which can be altered, changed, modified or revoked B. A trust that forbids a beneficiary to sell or pledge away his interests in the trust C. A trust created in a will which takes effect after the death of the person making the will D. A trust created by depositing money into a bank account in the creator's name as the trustee for another
9. Which is an example of tangible personal property?
A. Real estate B. A small business C. A copyright D. A valuable painting
10. A special needs beneficiary is a person:
A. Granted an allowance from the estate while probate proceeds B. Who is a minor child under 21 years old C. Who receives government benefits for a disability D. Who requires a financial guardian to ensure that his inheritance isn't wasted
11. The Crummey Power refers to:
A. A 30 day period during which a beneficiary may withdraw funds the grantor has deposited in a trust B. The power a contester has to halt probate proceedings by filng a letter of contest with the probate court C. The right the I.R.S. exercises to tax gifts to children if the gift exceeds $750 D. None of the above
12. In 2004, what is the maximum estate tax rate for amounts that exceed the allowable exemption?
A. 48% B. 55% C. 43% D. 24%
13. The inheritance tax:
A. Is based on each beneficiary's share of the estate after distribution B. Is levied upon the entire amount of property left behind C. Is just another name for the estate tax D. Is a tax designed to discourage bequests to grandchildren
14. One of the advantages of using life insurance in estate planning is:
A. Insurance is relatively easy to obtain and affordable B. Insurance assets can be liquidated quickly C. Gifts of insurance premiums will incur less taxes than outright cash gifts D. All of the above
15. Which of the following is not a major player in the operation of a trust?
A. Grantor B. Beneficiary C. Trustee D. Accountant
16. Unless Congress acts to change the law, in 2010:
A. The allowable state tax exemptions will reach $3.5 million B. The estate tax will be completely repealed C. The estate tax will be rolled back to its pre-2001 levels D. The estate tax rate will reach 55% for amounts over $1 million
17. Which is true of the bypass trust?
A. It's used to skip over a child in order to leave property to a grandchild B. It provides beneficiaries a portion of decedent's estate without including that portion in the beneficiary's taxable estate C. The creator of the trust must leave the bulk of his assets to qualified charities D. It ensures extra protection from creditors by assigning property ownership to a trust within a trust
18. Which was not a provision of the Economic Growth and Tax Relief Reconciliation Act of 2001?
A. A graduated increase in the estate tax exemption over a 10 year period B. An increase in the 401K maximum contribution amount C. An additional "catch up" IRA contribution amount for people over 50 D. The creation of a "kiddie tax"
19. A limited power of attorney refers to: