Estate Planning: Practice Exam
questions well answered
Which of the following is not a transfer cost associated with estate planning?
A) Document preparation
B) Attorney's fees
C) CPA's fees
D) Insurance premiums - correct answer ✔✔ D) Insurance premiums
Insurance premiums are not a transfer cost associated with estate planning. All of the other
answers are costs associated with estate planning.
You are opening a new financial planning practice and you would like to put together a team of
experts to help your clients with estate planning. Which of the following groups represents the
best team to help your clients?
A) Financial planner, CPA, and attorney.
B) CPA, psychiatrist, and insurance salesman.
C) Financial planner, attorney, and real estate agent.
D) Attorney, insurance salesman, and IRS agent. - correct answer ✔✔ A) Financial planner, CPA,
and attorney.
The best team for your client would include a financial planner, CPA, and attorney.
,A licensed insurance specialist and real estate agent are also good additions to an estate
planning team, but the team described in statement (A) covers all of the required aspects of an
estate planning team: financial planning, tax planning, and legal representation.
Although he has a vast fortune, Ricky has decided not to prepare an estate plan because he
believes that his surviving family members will divide up his assets appropriately. Which of the
following is not a risk associated with failing to plan an estate?
A) Ricky's estate could incur excessive transfer taxes.
B) Ricky's favorite Corvette may not be transferred to his ex-wife, Carla.
C) Ricky's insurance policy on his own life may not be paid out to the named beneficiary.
D) Ricky's current wife, Lucille, may not provide for Ricky's children from a previous marriage. -
correct answer ✔✔ C) Ricky's insurance policy on his own life may not be paid out to the named
beneficiary.
The proceeds of insurance policies with named beneficiaries pass outside of probate via state
contract law. Ricky's failure to plan his estate will not affect the payment of his insurance policy.
Tracey is a financial planner who recently received his CFP® designation. Tracey does not have
any other designations or licenses. Although Tracey's expertise is investment planning, he is
anxious to expand his client base and is willing to assist clients with any area of financial
planning. Over the last month, Tracey engaged in the following activities with Troy, a new client.
I. During the initial meeting, Tracey collected personal data about Troy, including the estate
planning documents Troy had previously executed.
II. During the second meeting, Tracey recommended the use of a trust to fulfill some of Troy's
estate planning goals.
,III. Troy called Tracey one afternoon and asked if Tracey could explain the probate process to
him, which Tracey promptly did.
IV. Tracey downloaded a copy of a generic will from the internet, filled in Troy's information and
gave the document to Troy to be executed.
Of the activi - correct answer ✔✔ A) IV only
Only statement four would be considered the unauthorized practice of law.
The drafting of legal documents is reserved for attorneys.
Inquiring about estate planning documents should be completed by all practitioners.
Recommending appropriate estate planning devices, such as trusts, can be done by financial
planners.
Explaining the probate process to a client would not be the unauthorized practice of law; the
line would be crossed if Tracey gave legal advice regarding the probate process.
Which of the following is not a common estate planning goal?
A) Maximizing transfer costs.
B) Minimizing transfer taxes.
C) Providing for liquidity at death.
D) Fulfilling client's healthcare decisions. - correct answer ✔✔ A) Maximizing transfer costs.
, Maximizing transfer costs is not an estate planning goal. Transfer costs should be minimized to
the greatest extent possible, while also fulfilling the client's goals.
All of the other answers are common estate planning goals.
Of the following, who should generally be a member of the estate planning team?
I. Investment Advisor
II. Trustee
III. Insurance agent
IV. Attorney
A) I and II
B) I, III, and IV
C) I, II, and III
D) I, II, III, and IV - correct answer ✔✔ B) I, III, and IV
A trustee is not a member of the estate planning team, because the trustee's responsibility is
not to advise the client about forming the estate plan but to carry out the terms of the trust
document.
You are a CFP® professional and although you never went to law school, you consider yourself
to be very good at reviewing wills. Your client, Catherine, asks you to prepare a will for her.
Should you prepare a will for Catherine?
A) Yes, Catherine is your best client and you might lose her if you do not prepare the will.
B) Yes, it is permissible for a CFP® professional to prepare a legal document.
C) No, preparing Catherine's will would be considered the unauthorized practice of law.
questions well answered
Which of the following is not a transfer cost associated with estate planning?
A) Document preparation
B) Attorney's fees
C) CPA's fees
D) Insurance premiums - correct answer ✔✔ D) Insurance premiums
Insurance premiums are not a transfer cost associated with estate planning. All of the other
answers are costs associated with estate planning.
You are opening a new financial planning practice and you would like to put together a team of
experts to help your clients with estate planning. Which of the following groups represents the
best team to help your clients?
A) Financial planner, CPA, and attorney.
B) CPA, psychiatrist, and insurance salesman.
C) Financial planner, attorney, and real estate agent.
D) Attorney, insurance salesman, and IRS agent. - correct answer ✔✔ A) Financial planner, CPA,
and attorney.
The best team for your client would include a financial planner, CPA, and attorney.
,A licensed insurance specialist and real estate agent are also good additions to an estate
planning team, but the team described in statement (A) covers all of the required aspects of an
estate planning team: financial planning, tax planning, and legal representation.
Although he has a vast fortune, Ricky has decided not to prepare an estate plan because he
believes that his surviving family members will divide up his assets appropriately. Which of the
following is not a risk associated with failing to plan an estate?
A) Ricky's estate could incur excessive transfer taxes.
B) Ricky's favorite Corvette may not be transferred to his ex-wife, Carla.
C) Ricky's insurance policy on his own life may not be paid out to the named beneficiary.
D) Ricky's current wife, Lucille, may not provide for Ricky's children from a previous marriage. -
correct answer ✔✔ C) Ricky's insurance policy on his own life may not be paid out to the named
beneficiary.
The proceeds of insurance policies with named beneficiaries pass outside of probate via state
contract law. Ricky's failure to plan his estate will not affect the payment of his insurance policy.
Tracey is a financial planner who recently received his CFP® designation. Tracey does not have
any other designations or licenses. Although Tracey's expertise is investment planning, he is
anxious to expand his client base and is willing to assist clients with any area of financial
planning. Over the last month, Tracey engaged in the following activities with Troy, a new client.
I. During the initial meeting, Tracey collected personal data about Troy, including the estate
planning documents Troy had previously executed.
II. During the second meeting, Tracey recommended the use of a trust to fulfill some of Troy's
estate planning goals.
,III. Troy called Tracey one afternoon and asked if Tracey could explain the probate process to
him, which Tracey promptly did.
IV. Tracey downloaded a copy of a generic will from the internet, filled in Troy's information and
gave the document to Troy to be executed.
Of the activi - correct answer ✔✔ A) IV only
Only statement four would be considered the unauthorized practice of law.
The drafting of legal documents is reserved for attorneys.
Inquiring about estate planning documents should be completed by all practitioners.
Recommending appropriate estate planning devices, such as trusts, can be done by financial
planners.
Explaining the probate process to a client would not be the unauthorized practice of law; the
line would be crossed if Tracey gave legal advice regarding the probate process.
Which of the following is not a common estate planning goal?
A) Maximizing transfer costs.
B) Minimizing transfer taxes.
C) Providing for liquidity at death.
D) Fulfilling client's healthcare decisions. - correct answer ✔✔ A) Maximizing transfer costs.
, Maximizing transfer costs is not an estate planning goal. Transfer costs should be minimized to
the greatest extent possible, while also fulfilling the client's goals.
All of the other answers are common estate planning goals.
Of the following, who should generally be a member of the estate planning team?
I. Investment Advisor
II. Trustee
III. Insurance agent
IV. Attorney
A) I and II
B) I, III, and IV
C) I, II, and III
D) I, II, III, and IV - correct answer ✔✔ B) I, III, and IV
A trustee is not a member of the estate planning team, because the trustee's responsibility is
not to advise the client about forming the estate plan but to carry out the terms of the trust
document.
You are a CFP® professional and although you never went to law school, you consider yourself
to be very good at reviewing wills. Your client, Catherine, asks you to prepare a will for her.
Should you prepare a will for Catherine?
A) Yes, Catherine is your best client and you might lose her if you do not prepare the will.
B) Yes, it is permissible for a CFP® professional to prepare a legal document.
C) No, preparing Catherine's will would be considered the unauthorized practice of law.
