CHFC EVALUATION EXAMS UPDATED ALL
QUESTIONS AND ANSWERS SURE A+
✔✔What is a durable power of attorney? - ✔✔A POA remaining effective after
incapacity
✔✔What is a closely held business? - ✔✔A business owned by a small group of
individuals
✔✔What is a general partnership? - ✔✔A business entity where owners have unlimited
liability
✔✔What is an LLC? - ✔✔A limited liability company combining liability protection with
pass-through taxation
✔✔What is an S corporation? - ✔✔A pass-through corporation with eligibility restrictions
✔✔What is a C corporation? - ✔✔A separately taxable business entity
✔✔What is double taxation in a corporation? - ✔✔Corporate earnings taxed at both
corporate and shareholder levels
, ✔✔What is a buy-sell agreement? - ✔✔An agreement controlling transfer of business
ownership interests
✔✔What is a cross-purchase agreement? - ✔✔Owners purchase the deceased owner's
interest directly
✔✔What is a stock redemption agreement? - ✔✔The business entity redeems the
deceased owner's interest
✔✔What is a GRAT? - ✔✔A grantor retained annuity trust used as an estate-freezing
strategy
✔✔Why is appreciation beneficial in a GRAT? - ✔✔Growth above the IRS assumed rate
may pass tax-efficiently to beneficiaries
✔✔What is an estate freeze? - ✔✔A strategy transferring future appreciation out of the
taxable estate
✔✔What is an installment sale? - ✔✔A sale with payments received over time
✔✔What is a private annuity? - ✔✔A transfer in exchange for lifetime payment
obligations
✔✔What is Section 6166? - ✔✔A provision allowing installment payment of estate taxes
for qualifying closely held businesses
✔✔What is the purpose of risk management? - ✔✔Reducing exposure to potentially
catastrophic financial losses
✔✔Which risks are most suitable for insurance? - ✔✔Low-frequency, high-severity risks
✔✔What are the six steps of financial planning? - ✔✔Establish relationship, gather
data, analyze, develop recommendations, implement, monitor
✔✔What is comprehensive financial planning? - ✔✔A client-centered process
integrating multiple financial disciplines
✔✔What is single-purpose financial planning? - ✔✔Planning focused on one narrow
financial issue
✔✔What is an engagement letter? - ✔✔A written agreement defining scope, services,
fees, and responsibilities
QUESTIONS AND ANSWERS SURE A+
✔✔What is a durable power of attorney? - ✔✔A POA remaining effective after
incapacity
✔✔What is a closely held business? - ✔✔A business owned by a small group of
individuals
✔✔What is a general partnership? - ✔✔A business entity where owners have unlimited
liability
✔✔What is an LLC? - ✔✔A limited liability company combining liability protection with
pass-through taxation
✔✔What is an S corporation? - ✔✔A pass-through corporation with eligibility restrictions
✔✔What is a C corporation? - ✔✔A separately taxable business entity
✔✔What is double taxation in a corporation? - ✔✔Corporate earnings taxed at both
corporate and shareholder levels
, ✔✔What is a buy-sell agreement? - ✔✔An agreement controlling transfer of business
ownership interests
✔✔What is a cross-purchase agreement? - ✔✔Owners purchase the deceased owner's
interest directly
✔✔What is a stock redemption agreement? - ✔✔The business entity redeems the
deceased owner's interest
✔✔What is a GRAT? - ✔✔A grantor retained annuity trust used as an estate-freezing
strategy
✔✔Why is appreciation beneficial in a GRAT? - ✔✔Growth above the IRS assumed rate
may pass tax-efficiently to beneficiaries
✔✔What is an estate freeze? - ✔✔A strategy transferring future appreciation out of the
taxable estate
✔✔What is an installment sale? - ✔✔A sale with payments received over time
✔✔What is a private annuity? - ✔✔A transfer in exchange for lifetime payment
obligations
✔✔What is Section 6166? - ✔✔A provision allowing installment payment of estate taxes
for qualifying closely held businesses
✔✔What is the purpose of risk management? - ✔✔Reducing exposure to potentially
catastrophic financial losses
✔✔Which risks are most suitable for insurance? - ✔✔Low-frequency, high-severity risks
✔✔What are the six steps of financial planning? - ✔✔Establish relationship, gather
data, analyze, develop recommendations, implement, monitor
✔✔What is comprehensive financial planning? - ✔✔A client-centered process
integrating multiple financial disciplines
✔✔What is single-purpose financial planning? - ✔✔Planning focused on one narrow
financial issue
✔✔What is an engagement letter? - ✔✔A written agreement defining scope, services,
fees, and responsibilities
