Q. When can a bank trustee sell or purchase assets from a trust where it serves in a fiduciary
capacity?
A. When the trustee desires to relieve itself from such liability with the approval of the
board
B. When the trust sells property to any non-officer of the bank, if the trust committee deems
the price reasonable
C. When the trust purchases stock or obligations of the bank, if the bank or its holding com-
pany is listed on a recognized stock exchange
D. When the trust sells assets in one account to itself as fiduciary in another account, if the
transaction is fair to both accounts and not prohibited by any governing instrument or local
law - ANSWER D. When the trust sells assets in one account to itself as fiduciary in an-
other account, if the transaction is fair to both accounts and not prohibited by any governing
instrument or local law
Q. Pertaining to the ownership of property, which statement is correct?
A. Joint tenancy ownership of an asset cannot occur between non-spouses.
B. When property is owned as tenancy in common form by four owners, each party's inter-
est must be 25 percent.
C. Tenancy in common ownership can occur between spouses.
D. Joint tenancy property must pass through probate upon the death of the first tenant. -
ANSWER C. Tenancy in common ownership can occur between spouses.
Q. A variable annuity resembles which of the following?
A. Fixed income mutual fund
B. Fixed income IRA
C. Equity mutual fund
D. Qualified pension plan - ANSWER C. Equity mutual fund
1
,Q. A client has a nongrantor trust that does not distribute all of its ordinary income earned
and realized capital gains. The trust is in a state that has a significant state income tax. Which
of the following will minimize or eliminate trust income tax?
A. Decant the trust.
B. Use a nonjudicial settlement agreement.
C. Change situs to a state that has no trust income tax.
D. Incorporate a dynasty trust provision addressing trust taxation. - ANSWER C. Change
situs to a state that has no trust income tax.
Q. Which of the following statements describes both a traditional IRA and a Roth IRA?
A. Contributions are allowed at any age.
B. Annual contribution limits are the same.
C. Withdrawals are taxed as ordinary income.
D. The impact on estate planning is equivalent. - ANSWER B. Annual contribution limits
are the same.
Q. A client makes a cash gift to a friend in January of this year in the amount of $16,000.
When is the client required to file a federal gift tax return?
A. Never
B. On or before April 15 this year
C. On or before April 15 next year
D. On or before April 15 of the year following the acceptance of the gift - ANSWER A.
Never
Q. The Federal Reserve Open Markets Committee has begun raising short-term interest
rates. Which of the following risk types creates the most risk to a portfolio?
A. Issue
B. Credit
C. Interest rate
D. Legislative/political - ANSWER C. Interest rate
2
, Q. Which of the following is included in gross income?
A. Roth IRA distributions
B. Child support payments
C. Life insurance proceeds
D. Award of punitive damages - ANSWER D. Award of punitive damages
Q. The residuary beneficiaries of an $8,000,000 estate are the decedent's two children, per
stirpes. The bank and child 1 are co-executors of the estate. Child 1 has amassed a large es-
tate and is concerned about tax implications of the inheritance and asks what options are
available to minimize child 1's future estate tax. You inform child 1 that the decedent did not
use the available GST tax exemption during life and that the governing document provides
the option to disclaim the inheritance. Which of the following describes the appropriate next
action the bank should take?
A. Advise child 1 to seek legal counsel on these matters.
B. Advise child 1 to contact child 2 to inform child 2 of these options.
C. Provide child 1 with a written explanation of the recommendations.
D. Provide child 1 and child 2 with a written recommendation and advise them to consult in-
dependent counsel. - ANSWER A. Advise child 1 to seek legal counsel on these matters.
Q. A client and attorney are creating a trust that will allow for discretionary payments among
the client's children, grandchildren, and spouse based on each of their individual financial
needs with no obligation to equalize payments. To effect this, the attorney should include
which of the following in the trust documents?
A. 5 by 5 power
B. Crummey provisions
C. Sprinkling provisions
D. Generation-skipping provisions - ANSWER C. Sprinkling provisions
Q. What can a relationship manager offer to encourage referrals from internal partners or
centers of influence?
3
capacity?
A. When the trustee desires to relieve itself from such liability with the approval of the
board
B. When the trust sells property to any non-officer of the bank, if the trust committee deems
the price reasonable
C. When the trust purchases stock or obligations of the bank, if the bank or its holding com-
pany is listed on a recognized stock exchange
D. When the trust sells assets in one account to itself as fiduciary in another account, if the
transaction is fair to both accounts and not prohibited by any governing instrument or local
law - ANSWER D. When the trust sells assets in one account to itself as fiduciary in an-
other account, if the transaction is fair to both accounts and not prohibited by any governing
instrument or local law
Q. Pertaining to the ownership of property, which statement is correct?
A. Joint tenancy ownership of an asset cannot occur between non-spouses.
B. When property is owned as tenancy in common form by four owners, each party's inter-
est must be 25 percent.
C. Tenancy in common ownership can occur between spouses.
D. Joint tenancy property must pass through probate upon the death of the first tenant. -
ANSWER C. Tenancy in common ownership can occur between spouses.
Q. A variable annuity resembles which of the following?
A. Fixed income mutual fund
B. Fixed income IRA
C. Equity mutual fund
D. Qualified pension plan - ANSWER C. Equity mutual fund
1
,Q. A client has a nongrantor trust that does not distribute all of its ordinary income earned
and realized capital gains. The trust is in a state that has a significant state income tax. Which
of the following will minimize or eliminate trust income tax?
A. Decant the trust.
B. Use a nonjudicial settlement agreement.
C. Change situs to a state that has no trust income tax.
D. Incorporate a dynasty trust provision addressing trust taxation. - ANSWER C. Change
situs to a state that has no trust income tax.
Q. Which of the following statements describes both a traditional IRA and a Roth IRA?
A. Contributions are allowed at any age.
B. Annual contribution limits are the same.
C. Withdrawals are taxed as ordinary income.
D. The impact on estate planning is equivalent. - ANSWER B. Annual contribution limits
are the same.
Q. A client makes a cash gift to a friend in January of this year in the amount of $16,000.
When is the client required to file a federal gift tax return?
A. Never
B. On or before April 15 this year
C. On or before April 15 next year
D. On or before April 15 of the year following the acceptance of the gift - ANSWER A.
Never
Q. The Federal Reserve Open Markets Committee has begun raising short-term interest
rates. Which of the following risk types creates the most risk to a portfolio?
A. Issue
B. Credit
C. Interest rate
D. Legislative/political - ANSWER C. Interest rate
2
, Q. Which of the following is included in gross income?
A. Roth IRA distributions
B. Child support payments
C. Life insurance proceeds
D. Award of punitive damages - ANSWER D. Award of punitive damages
Q. The residuary beneficiaries of an $8,000,000 estate are the decedent's two children, per
stirpes. The bank and child 1 are co-executors of the estate. Child 1 has amassed a large es-
tate and is concerned about tax implications of the inheritance and asks what options are
available to minimize child 1's future estate tax. You inform child 1 that the decedent did not
use the available GST tax exemption during life and that the governing document provides
the option to disclaim the inheritance. Which of the following describes the appropriate next
action the bank should take?
A. Advise child 1 to seek legal counsel on these matters.
B. Advise child 1 to contact child 2 to inform child 2 of these options.
C. Provide child 1 with a written explanation of the recommendations.
D. Provide child 1 and child 2 with a written recommendation and advise them to consult in-
dependent counsel. - ANSWER A. Advise child 1 to seek legal counsel on these matters.
Q. A client and attorney are creating a trust that will allow for discretionary payments among
the client's children, grandchildren, and spouse based on each of their individual financial
needs with no obligation to equalize payments. To effect this, the attorney should include
which of the following in the trust documents?
A. 5 by 5 power
B. Crummey provisions
C. Sprinkling provisions
D. Generation-skipping provisions - ANSWER C. Sprinkling provisions
Q. What can a relationship manager offer to encourage referrals from internal partners or
centers of influence?
3
