FP516 CFP Estate Planning Test Questions with Correct Answers Latest Update 2025 Graded A+
Stella transferred a residence that was in her sole name to her and her four children as joint tenants
with right of survivorship to avoid probate of this asset. No child provided any consideration for this
transfer.
When Stella dies, what percentage of the fair market value of this asset must be included in her gross
estate?
A) 50%
B) 100%
C) 20%
D) 10% - Answers 100%
Luis consults a CFP® professional for help in formulating an estate plan. Luis's primary objective is to
avoid probate when he dies. Among his assets are a traditional IRA and the house he lives in. In helping
Luis meet the specific goal of avoiding probate, the CFP® professional would consider which of the
following items of information?
I. Luis's statement of financial position
II. Beneficiary designation forms for the IRA
III. Whether Luis has any children
IV. The deed to Luis's house
A) I, II, and IV
B) I, II, III, and IV
C) I and III
D) II and IV - Answers I, II and IV
The statement of financial position will help determine what assets Luis owns and whether they are
titled in a way that avoids probate (e.g., as joint tenants with right of survivorship). The same applies to
the deed to Luis's house. The IRA beneficiary designation forms will determine whether the IRA will
,avoid probate because it is payable to a named beneficiary by contract. Statement III is incorrect.
Whether Luis has children has no bearing on whether his estate will avoid probate.
Eduardo has been a client of yours for many years. You met him shortly after he was married and
continued to do so after his divorce. Recently he shared with you that he is getting remarried. You share
that the two of you should review his documents to ensure they align with his goals now. This is an
example of avoiding which of the following mistakes, pitfalls, or weaknesses?
A) Improper titling of assets
B) Improperly arranged life insurance
C) Lack of estate liquidity
D) Failure to recommend necessary changes to a will - Answers D) Failure to recommend necessary
changes to a will.
It is the only answer choice which addresses documents. The remaining answer choices would also be
good to avoid, but they do not involve the will, powers of attorney, or other specific documents.
Norman owns property as tenants in common with his brother James. Norman has a 30% interest and
James has a 70% interest. Which of the following statements are correct?
I. During Norman's lifetime he can sell or transfer his 30% interest to anyone of his choosing.
II. At the death of James he may leave his 70% interest to anyone through his will.
A) Neither I nor II
B) I only
C) Both I and II
D) II only - Answers Both I and II
Gil and Tina are newlyweds who live in a community property state. Assuming no titling changes were
made, which of the following assets would be separate property?
I. A parcel of land owned by Gil prior to marriage
II. An antique desk Tina inherits from her aunt during the marriage
,III. A money market account gifted to Gil before marriage
A) I, II, and III
B) I and II
C) I and III
D) II only - Answers I, II and III
Daniel, age 70, consults a CFP® professional for help with his estate plan. He tells the CFP® professional
that he owns substantial assets, all titled in his name alone, and that he is married to Roberta, who is 60
years old. Daniel and Roberta have no children together, but Daniel has two children from a prior
marriage. Daniel tells the CFP® professional that he wants to ensure that Roberta has sufficient income
to support herself if he should die first and that he wants to minimize the estate tax payable when he
dies to the extent possible. Which of the following additional information should the CFP® professional
obtain before making a recommendation to Daniel?
I. The value of Daniel's assets
II. Whether Roberta has any sources of income and, if so, their amounts
III. Whether Daniel wants any of his assets to ultimately pass to his children
IV. Whether Roberta is a U.S. citizen
A) I, II, and III
B) I, II, an - Answers D) I, II, III, and IV
Statement I is correct because the value of Daniel's assets will determine whether his estate might be
subject to estate tax when he dies. Statement II is correct because the amounts of Roberta's income
sources will determine whether Daniel needs to leave her any assets to ensure she has sufficient income
to support herself. Statement III is correct because if Daniel wants to ensure that any of his assets
ultimately pass to his children, he will need to limit Roberta's ability to control the disposition of the
assets when she dies. Statement IV is correct because if Roberta is not a U.S. citizen, a QDOT will be
necessary to ensure that any assets Daniel leaves to her will qualify for the marital deduction.
Which of the following statements regarding community property is CORRECT?
, I. Each spouse is deemed to own a one-half interest in property acquired during the marriage regardless
of which spouse acquired, earned, gained, or is otherwise responsible for ownership of the property.
II. Property inherited by or gifted to an individual spouse during marriage is considered community
property.
A) Neither I nor II
B) II only
C) I only
D) Both I and II - Answers I Only
Statement II is incorrect because in community property states, property that is inherited by or gifted to
an individual spouse during marriage would be separate property.
You are a CFP® certificant. A client has come to you for assistance. You should inform the client of which
of the following?
I. You can provide the client with "fill-in-the-blank" durable power of attorney forms for both finances
and health care, as well as living wills, and help the client complete and execute these documents.
II. You can be involved in data gathering, identifying goals, and identifying possible weaknesses and
problem areas in the client's current situation.
III. Your primary role will be working with and coordinating other financial planning professionals.
IV. You can review the client's current documents to interpret the contents and indicate what the legal
implications of the document are for the client.
A
) II and III
B) III only
C) I only
D) II, III, and IV - Answers II and III
Stella transferred a residence that was in her sole name to her and her four children as joint tenants
with right of survivorship to avoid probate of this asset. No child provided any consideration for this
transfer.
When Stella dies, what percentage of the fair market value of this asset must be included in her gross
estate?
A) 50%
B) 100%
C) 20%
D) 10% - Answers 100%
Luis consults a CFP® professional for help in formulating an estate plan. Luis's primary objective is to
avoid probate when he dies. Among his assets are a traditional IRA and the house he lives in. In helping
Luis meet the specific goal of avoiding probate, the CFP® professional would consider which of the
following items of information?
I. Luis's statement of financial position
II. Beneficiary designation forms for the IRA
III. Whether Luis has any children
IV. The deed to Luis's house
A) I, II, and IV
B) I, II, III, and IV
C) I and III
D) II and IV - Answers I, II and IV
The statement of financial position will help determine what assets Luis owns and whether they are
titled in a way that avoids probate (e.g., as joint tenants with right of survivorship). The same applies to
the deed to Luis's house. The IRA beneficiary designation forms will determine whether the IRA will
,avoid probate because it is payable to a named beneficiary by contract. Statement III is incorrect.
Whether Luis has children has no bearing on whether his estate will avoid probate.
Eduardo has been a client of yours for many years. You met him shortly after he was married and
continued to do so after his divorce. Recently he shared with you that he is getting remarried. You share
that the two of you should review his documents to ensure they align with his goals now. This is an
example of avoiding which of the following mistakes, pitfalls, or weaknesses?
A) Improper titling of assets
B) Improperly arranged life insurance
C) Lack of estate liquidity
D) Failure to recommend necessary changes to a will - Answers D) Failure to recommend necessary
changes to a will.
It is the only answer choice which addresses documents. The remaining answer choices would also be
good to avoid, but they do not involve the will, powers of attorney, or other specific documents.
Norman owns property as tenants in common with his brother James. Norman has a 30% interest and
James has a 70% interest. Which of the following statements are correct?
I. During Norman's lifetime he can sell or transfer his 30% interest to anyone of his choosing.
II. At the death of James he may leave his 70% interest to anyone through his will.
A) Neither I nor II
B) I only
C) Both I and II
D) II only - Answers Both I and II
Gil and Tina are newlyweds who live in a community property state. Assuming no titling changes were
made, which of the following assets would be separate property?
I. A parcel of land owned by Gil prior to marriage
II. An antique desk Tina inherits from her aunt during the marriage
,III. A money market account gifted to Gil before marriage
A) I, II, and III
B) I and II
C) I and III
D) II only - Answers I, II and III
Daniel, age 70, consults a CFP® professional for help with his estate plan. He tells the CFP® professional
that he owns substantial assets, all titled in his name alone, and that he is married to Roberta, who is 60
years old. Daniel and Roberta have no children together, but Daniel has two children from a prior
marriage. Daniel tells the CFP® professional that he wants to ensure that Roberta has sufficient income
to support herself if he should die first and that he wants to minimize the estate tax payable when he
dies to the extent possible. Which of the following additional information should the CFP® professional
obtain before making a recommendation to Daniel?
I. The value of Daniel's assets
II. Whether Roberta has any sources of income and, if so, their amounts
III. Whether Daniel wants any of his assets to ultimately pass to his children
IV. Whether Roberta is a U.S. citizen
A) I, II, and III
B) I, II, an - Answers D) I, II, III, and IV
Statement I is correct because the value of Daniel's assets will determine whether his estate might be
subject to estate tax when he dies. Statement II is correct because the amounts of Roberta's income
sources will determine whether Daniel needs to leave her any assets to ensure she has sufficient income
to support herself. Statement III is correct because if Daniel wants to ensure that any of his assets
ultimately pass to his children, he will need to limit Roberta's ability to control the disposition of the
assets when she dies. Statement IV is correct because if Roberta is not a U.S. citizen, a QDOT will be
necessary to ensure that any assets Daniel leaves to her will qualify for the marital deduction.
Which of the following statements regarding community property is CORRECT?
, I. Each spouse is deemed to own a one-half interest in property acquired during the marriage regardless
of which spouse acquired, earned, gained, or is otherwise responsible for ownership of the property.
II. Property inherited by or gifted to an individual spouse during marriage is considered community
property.
A) Neither I nor II
B) II only
C) I only
D) Both I and II - Answers I Only
Statement II is incorrect because in community property states, property that is inherited by or gifted to
an individual spouse during marriage would be separate property.
You are a CFP® certificant. A client has come to you for assistance. You should inform the client of which
of the following?
I. You can provide the client with "fill-in-the-blank" durable power of attorney forms for both finances
and health care, as well as living wills, and help the client complete and execute these documents.
II. You can be involved in data gathering, identifying goals, and identifying possible weaknesses and
problem areas in the client's current situation.
III. Your primary role will be working with and coordinating other financial planning professionals.
IV. You can review the client's current documents to interpret the contents and indicate what the legal
implications of the document are for the client.
A
) II and III
B) III only
C) I only
D) II, III, and IV - Answers II and III
