AAMS PRACTICE EXAM TEST UPDATED QUESTIONS AND
ANSWERS GRADED A+
✔✔Section 457 plans cover employee of what type of organizations? - ✔✔Not for profit
organizations
✔✔Elections to defer compensation must be made when? - ✔✔In the year prior to the
tax year that services are to be delivered
✔✔T or F. There is no such thing as an unrestricted stock plan. - ✔✔true
✔✔Is a 1035 exchange permitted from an annuity to Cash Value Life insurance? -
✔✔no
✔✔What are the most commonly overlooked risks for clients? - ✔✔Long-Term Care and
Disability Income
✔✔What is estate planning? - ✔✔It is the process of planning for the accumulation,
conservation, and distribution of an estate to effectively and efficiently accomplish both
tax and nontax objectives
✔✔What is the Probate Estate? - ✔✔It is the estate that involves all property interests
that do not automatically transfer to beneficiaries
✔✔T or F. The gross estate includes all property that is subject to the federal estate tax.
- ✔✔true
✔✔inter vivos means what? - ✔✔during life
✔✔testamentary means what? - ✔✔after death
✔✔What is the valuation date for gifts? - ✔✔the date on which the gift was completed
✔✔What is the look-back period for the IRS to challenge the value of adequately
disclosed gifts? - ✔✔3 years
✔✔What is the valuation date for the estate? - ✔✔it is either the date of death of the
decedent or 6 months after date of death
✔✔As it relates to Estate Planning, what is the alternate evaluation date? - ✔✔The
executor of an estate may elect to use an alternate valuation date to value property
included in the gross estate, but only if there is an estate tax to pay and only if that
estate tax is reduced by the use of the alternate valuation date.
, ✔✔A legal trust requires what 5 things? - ✔✔1) Trustor
2) Trustee
3) beneficiary
4) trust corpus
5) fiduciary relationship
✔✔What are some other terms for a Bypass trust? - ✔✔aka Credit Shelter Trust, B
trust, a family trust, applicable exclusion amount trust
✔✔What is a Credit Shelter Trust? - ✔✔It is an irrevocable trust created by one spouse
to benefit the other spouse and/or family
✔✔Durable POA for healthcare, aka what? - ✔✔Medical Proxy
✔✔T or F. Property held TIC is subject to probate. - ✔✔True
✔✔A Crummey Power is a type of power of appointment. T or F? - ✔✔True
✔✔Does JTWROS bypass probate? - ✔✔yes
✔✔T or F. Tenancy by the entirety is joint ownership typically between spouses. -
✔✔true
✔✔Life insurance proceeds are not subject to income tax, but can be subject to estate
tax, especially if what occured? - ✔✔If the decedent had an "incident of ownership"
✔✔What law/rule is the regulation of mutual funds covered under? - ✔✔Investment
Company Act of 1940
✔✔The biggest responsibility for FINRA is what? - ✔✔To develop rules and regulations
for its' members
✔✔What is the approximate dollar amount of US assets held in IRA accounts at the end
of 2017? - ✔✔9.2 trillion
✔✔Which fiduciary duty requires the adviser to look out for the best interest of the
client? - ✔✔The fiduciary duty of care
✔✔What is the estimated annual cost of conflicted advice? - ✔✔1%
✔✔The SIPC act of 1970 insures a client's cash position up to what amount? -
✔✔$250,000
ANSWERS GRADED A+
✔✔Section 457 plans cover employee of what type of organizations? - ✔✔Not for profit
organizations
✔✔Elections to defer compensation must be made when? - ✔✔In the year prior to the
tax year that services are to be delivered
✔✔T or F. There is no such thing as an unrestricted stock plan. - ✔✔true
✔✔Is a 1035 exchange permitted from an annuity to Cash Value Life insurance? -
✔✔no
✔✔What are the most commonly overlooked risks for clients? - ✔✔Long-Term Care and
Disability Income
✔✔What is estate planning? - ✔✔It is the process of planning for the accumulation,
conservation, and distribution of an estate to effectively and efficiently accomplish both
tax and nontax objectives
✔✔What is the Probate Estate? - ✔✔It is the estate that involves all property interests
that do not automatically transfer to beneficiaries
✔✔T or F. The gross estate includes all property that is subject to the federal estate tax.
- ✔✔true
✔✔inter vivos means what? - ✔✔during life
✔✔testamentary means what? - ✔✔after death
✔✔What is the valuation date for gifts? - ✔✔the date on which the gift was completed
✔✔What is the look-back period for the IRS to challenge the value of adequately
disclosed gifts? - ✔✔3 years
✔✔What is the valuation date for the estate? - ✔✔it is either the date of death of the
decedent or 6 months after date of death
✔✔As it relates to Estate Planning, what is the alternate evaluation date? - ✔✔The
executor of an estate may elect to use an alternate valuation date to value property
included in the gross estate, but only if there is an estate tax to pay and only if that
estate tax is reduced by the use of the alternate valuation date.
, ✔✔A legal trust requires what 5 things? - ✔✔1) Trustor
2) Trustee
3) beneficiary
4) trust corpus
5) fiduciary relationship
✔✔What are some other terms for a Bypass trust? - ✔✔aka Credit Shelter Trust, B
trust, a family trust, applicable exclusion amount trust
✔✔What is a Credit Shelter Trust? - ✔✔It is an irrevocable trust created by one spouse
to benefit the other spouse and/or family
✔✔Durable POA for healthcare, aka what? - ✔✔Medical Proxy
✔✔T or F. Property held TIC is subject to probate. - ✔✔True
✔✔A Crummey Power is a type of power of appointment. T or F? - ✔✔True
✔✔Does JTWROS bypass probate? - ✔✔yes
✔✔T or F. Tenancy by the entirety is joint ownership typically between spouses. -
✔✔true
✔✔Life insurance proceeds are not subject to income tax, but can be subject to estate
tax, especially if what occured? - ✔✔If the decedent had an "incident of ownership"
✔✔What law/rule is the regulation of mutual funds covered under? - ✔✔Investment
Company Act of 1940
✔✔The biggest responsibility for FINRA is what? - ✔✔To develop rules and regulations
for its' members
✔✔What is the approximate dollar amount of US assets held in IRA accounts at the end
of 2017? - ✔✔9.2 trillion
✔✔Which fiduciary duty requires the adviser to look out for the best interest of the
client? - ✔✔The fiduciary duty of care
✔✔What is the estimated annual cost of conflicted advice? - ✔✔1%
✔✔The SIPC act of 1970 insures a client's cash position up to what amount? -
✔✔$250,000
