Estate Planning – Exam 1 (2025/2026 Latest
Exam Prep) | Complete Study Guide & Verified
Practice Q&A
Which of the following statements concerning the practice of law is correct?
A)The practice of law is defined by each state.
B)Special circumstances are sometimes given to financial planners to enable them to
draft wills, trust documents, and other legal documents.
C)Reviewing wills to ensure client goals are being addressed is considered practicing
law.
D)A licensed attorney can give anyone the right to practice law as their agent. - correct
answerA)The practice of law is defined by each state.
The first step in the estate planning process includes:
A)Meeting with the client to gather information regarding the client's assets, family
structure, current estate planning documents, and desires, as needed to understand the
client's circumstances.
B)Prioritizing the client's goals.
C)Developing a formal written estate plan.
D)Identifying key areas of concern in relation to the client's plan - taxes, cash on hand,
etc. - correct answerA)Meeting with the client to gather information regarding the client's
assets, family structure, current estate planning documents, and desires, as needed to
understand the client's circumstances.
Everyone has their own objectives with regard to estate planning. Which of the following
objectives is most important for a financial advisor to keep in mind when counseling a
client?
A)Maximize net to heirs.
B)Minimize estate tax.
C)Minimize administrative burdens.
D)Effectively transfer assets. - correct answerD) Effectively transfer assets.
Skip does not want to write a will. It upsets him to contemplate his own death and he
simply desires to avoid the estate planning process. All of the following are risks Skip's
estate may face due to his inaction, except:
A)Skip's property transfers contrary to his wishes.
B)Skip's estate may face liquidity problems.
C)Skip's estate faces increased estate administration fees.
D)Skip's estate faces increased debt payments for outstanding debts at death. - correct
answerD)Skip's estate faces increased debt payments for outstanding debts at death.
,Hardey is a financial planner in the state of Iowa. Although he attended one year of law
school, Hardey is not a licensed attorney. Which of the following actions would be
considered the practice of law?
A)Drafting wills, trust documents, and powers of attorney.
B)Reviewing wills, trust documents, and powers of attorney.
C)Directing a client to seek legal advice from a licensed attorney.
D)Acting as trustee for a client's trust. - correct answerA)Drafting wills, trust documents,
and powers of attorney.
Which of the following does not need estate planning?
A)Jeb, age 30, married with two minor children, and a net worth of $375,000.
B)Quynh, age 35, never been married, one severely disabled son.
C)Cynthia, age 45, single, has a net worth of $450,000 and two dogs.
D)All of the above need estate planning. - correct answerD)All of the above need estate
planning.
Of the following, who should generally be a member of the estate planning team?1.
Attorney2. Certified Public Accountant (CPA)3. Life insurance consultant4. Loan officer
A)1 and 2.
B)1 and 4.
C)1, 2, and 3.
D) 1, 2, 3, and 4 - correct answerC)1, 2, and 3.
Which of the following is a risk of failing to plan for one's estate?
1. Property transfers contrary to the client's wishes.2. The client's family may not be
provided for financially.3. The estate suffers liquidity problems at the client's death.4.
The estate may bear higher transfer costs.
A)2 only.
B)2 and 3.
C)1, 3, and 4.
D)1, 2, 3, and 4. - correct answerD)1, 2, 3, and 4.
Which of the following statements concerning estate planning is correct?
1. An effective transfer occurs when a person's assets are transferred to the person or
institution intended by that person.2. An efficient transfer occurs when transfer costs are
minimized consistent with the greatest assurance of effectiveness.
A)1 only.
B)2 only.
C)Both statements 1 and 2.
D) Neither 1 or 2 - correct answerC)Both statements 1 and 2.
Mahogany contacts you by phone. She is 65 and has accumulated over $3,000,000 in
assets. She informs you that she is not married, and wants to leave all of her assets
equally to her three adult children. She agrees to come meet with you, but asks what
, she should bring. Which one of the following items would be least important for
Mahogany to bring if the topic of discussion is estate planning?
A)A copy of her will and any codicils.
B)A copy of children's birth certificates.
C)A copy of life insurance policies.
D)A copy of latest bank statements. - correct answerB)A copy of children's birth
certificates.
Who on the estate planning team usually calculates the adjusted basis of assets and
addresses tax issues?
A)Licensed attorney.
B)Certified Public Accountant (CPA).
C)Financial planner.
D)Trust officer. - correct answerB)Certified Public Accountant (CPA).
Yara would like to meet with you regarding her estate plan. Yara is 55-years-old, and
currently has an estate that would be subject to estate tax. Her spouse died of lung
cancer last year. Yara has three children, ages 23, 26, and 32, and one grandchild, age
4. She does not have any dependents. Which of the following options would be the least
likely reason for Yara to have an estate plan?
A)Minimize estate and transfer taxes.
B)Minimize costs.
C)Plan for his children.
D)Plan for his incapacity. - correct answerC)Plan for his children.
Which of the following statements is the best definition of estate planning?
A)Estate planning is the process of accumulation, management, conservation, and
transfer of wealth considering legal, tax, and personal objectives.
B)Estate planning is the management, conservation, and transfer of wealth considering
estate tax transfer costs.
C)Estate planning is the management, conservation, and transfer of wealth considering
legal, tax, and personal objectives.
D)Estate planning is the process of accumulation, management, conservation, and
transfer of wealth considering estate and generation-skipping transfer tax costs. -
correct answerA)Estate planning is the process of accumulation, management,
conservation, and transfer of wealth considering legal, tax, and personal objectives.
Which of the following tasks is typically performed by a financial planner who is not a
licensed attorney or accountant?
A)Drafting wills, trust documents, and powers of attorney.
B)Calculating asset basis.
C)Managing trust assets.
D)Collecting data and assisting with investment decisions. - correct answerD)Collecting
data and assisting with investment decisions.
Exam Prep) | Complete Study Guide & Verified
Practice Q&A
Which of the following statements concerning the practice of law is correct?
A)The practice of law is defined by each state.
B)Special circumstances are sometimes given to financial planners to enable them to
draft wills, trust documents, and other legal documents.
C)Reviewing wills to ensure client goals are being addressed is considered practicing
law.
D)A licensed attorney can give anyone the right to practice law as their agent. - correct
answerA)The practice of law is defined by each state.
The first step in the estate planning process includes:
A)Meeting with the client to gather information regarding the client's assets, family
structure, current estate planning documents, and desires, as needed to understand the
client's circumstances.
B)Prioritizing the client's goals.
C)Developing a formal written estate plan.
D)Identifying key areas of concern in relation to the client's plan - taxes, cash on hand,
etc. - correct answerA)Meeting with the client to gather information regarding the client's
assets, family structure, current estate planning documents, and desires, as needed to
understand the client's circumstances.
Everyone has their own objectives with regard to estate planning. Which of the following
objectives is most important for a financial advisor to keep in mind when counseling a
client?
A)Maximize net to heirs.
B)Minimize estate tax.
C)Minimize administrative burdens.
D)Effectively transfer assets. - correct answerD) Effectively transfer assets.
Skip does not want to write a will. It upsets him to contemplate his own death and he
simply desires to avoid the estate planning process. All of the following are risks Skip's
estate may face due to his inaction, except:
A)Skip's property transfers contrary to his wishes.
B)Skip's estate may face liquidity problems.
C)Skip's estate faces increased estate administration fees.
D)Skip's estate faces increased debt payments for outstanding debts at death. - correct
answerD)Skip's estate faces increased debt payments for outstanding debts at death.
,Hardey is a financial planner in the state of Iowa. Although he attended one year of law
school, Hardey is not a licensed attorney. Which of the following actions would be
considered the practice of law?
A)Drafting wills, trust documents, and powers of attorney.
B)Reviewing wills, trust documents, and powers of attorney.
C)Directing a client to seek legal advice from a licensed attorney.
D)Acting as trustee for a client's trust. - correct answerA)Drafting wills, trust documents,
and powers of attorney.
Which of the following does not need estate planning?
A)Jeb, age 30, married with two minor children, and a net worth of $375,000.
B)Quynh, age 35, never been married, one severely disabled son.
C)Cynthia, age 45, single, has a net worth of $450,000 and two dogs.
D)All of the above need estate planning. - correct answerD)All of the above need estate
planning.
Of the following, who should generally be a member of the estate planning team?1.
Attorney2. Certified Public Accountant (CPA)3. Life insurance consultant4. Loan officer
A)1 and 2.
B)1 and 4.
C)1, 2, and 3.
D) 1, 2, 3, and 4 - correct answerC)1, 2, and 3.
Which of the following is a risk of failing to plan for one's estate?
1. Property transfers contrary to the client's wishes.2. The client's family may not be
provided for financially.3. The estate suffers liquidity problems at the client's death.4.
The estate may bear higher transfer costs.
A)2 only.
B)2 and 3.
C)1, 3, and 4.
D)1, 2, 3, and 4. - correct answerD)1, 2, 3, and 4.
Which of the following statements concerning estate planning is correct?
1. An effective transfer occurs when a person's assets are transferred to the person or
institution intended by that person.2. An efficient transfer occurs when transfer costs are
minimized consistent with the greatest assurance of effectiveness.
A)1 only.
B)2 only.
C)Both statements 1 and 2.
D) Neither 1 or 2 - correct answerC)Both statements 1 and 2.
Mahogany contacts you by phone. She is 65 and has accumulated over $3,000,000 in
assets. She informs you that she is not married, and wants to leave all of her assets
equally to her three adult children. She agrees to come meet with you, but asks what
, she should bring. Which one of the following items would be least important for
Mahogany to bring if the topic of discussion is estate planning?
A)A copy of her will and any codicils.
B)A copy of children's birth certificates.
C)A copy of life insurance policies.
D)A copy of latest bank statements. - correct answerB)A copy of children's birth
certificates.
Who on the estate planning team usually calculates the adjusted basis of assets and
addresses tax issues?
A)Licensed attorney.
B)Certified Public Accountant (CPA).
C)Financial planner.
D)Trust officer. - correct answerB)Certified Public Accountant (CPA).
Yara would like to meet with you regarding her estate plan. Yara is 55-years-old, and
currently has an estate that would be subject to estate tax. Her spouse died of lung
cancer last year. Yara has three children, ages 23, 26, and 32, and one grandchild, age
4. She does not have any dependents. Which of the following options would be the least
likely reason for Yara to have an estate plan?
A)Minimize estate and transfer taxes.
B)Minimize costs.
C)Plan for his children.
D)Plan for his incapacity. - correct answerC)Plan for his children.
Which of the following statements is the best definition of estate planning?
A)Estate planning is the process of accumulation, management, conservation, and
transfer of wealth considering legal, tax, and personal objectives.
B)Estate planning is the management, conservation, and transfer of wealth considering
estate tax transfer costs.
C)Estate planning is the management, conservation, and transfer of wealth considering
legal, tax, and personal objectives.
D)Estate planning is the process of accumulation, management, conservation, and
transfer of wealth considering estate and generation-skipping transfer tax costs. -
correct answerA)Estate planning is the process of accumulation, management,
conservation, and transfer of wealth considering legal, tax, and personal objectives.
Which of the following tasks is typically performed by a financial planner who is not a
licensed attorney or accountant?
A)Drafting wills, trust documents, and powers of attorney.
B)Calculating asset basis.
C)Managing trust assets.
D)Collecting data and assisting with investment decisions. - correct answerD)Collecting
data and assisting with investment decisions.
