1. Your elderly single client (Thomas) comes to you as his financial planner for help. Thomas has no debt, but he realizes that his memory is not as good as it used to be and his daughter (Lisa) is concerned that health issues might cause him to be hospitalized in the near future. Which of the following should you recommend:
I. Life insurance
II. Health care directive
III. Durable power of attorney
IV. Long-term care insurance
A) I and III only
B) II and IV only
C) II, III and IV only
D) I and II only
2. The specific power of attorney selection that doesn't go into effect until the individual becomes incapacitated is known as:
A) Springing power
B) Testamentary power
C) Limited power of attorney
D) Special power attorney
3. Which of the following estate planning tools would provide a good source of income for the life of someone that is unable to generate their own income due to disability or mental illness?
I. Growth mutual funds
II. Supplemental needs trust
III. ILIT
IV. Fixed annuity
A) I and II only
B) II and III only
C) II and IV only
D) I and IV only
4. Special needs trusts are established for
a. anyone who is incapacitated;
b. individuals who are receiving some sort of government assistance;
c. only the elderly with special needs;
d. only children with special needs.
5. The difference between a durable power of attorney and a springing power of attorney is:
a. the durable power of attorney (poa) takes effect immediately; the springing power of attorney (poa) takes effect only upon the occurrence of a specified event;
b. the durable poa takes effect only on the occurrence of a specified event; the springing poa immediately springs into effect;
c. both the durable poa and the springing poa take immediate effect;
d. both the durable poa and the springing poa take effect upon the occurrence of a specified event.
6. Which of the following is not an advantage of a revocable trust?
a. assets passing per the terms of a revocable trust will not be subject to probate;
b. assets passing per the terms of a revocable trust will not be included in a decedent’s gross estate;
c. a revocable trust offers privacy;
d. a revocable trust may provide for capacity.
7. Which of the following statements regarding a testamentary trust is not true?
a. testamentary trusts are created at decedent’s death per terms of his or her will;
b. assets in a testamentary trust are subject to probate;
c. assets passing by will to a testamentarytrust are included in decedent’s probate estate;
d. a testamentary trust is an irrevocable inter vivos trust;
8. Which of the following are functions of a spendthrift provision?
a. to prohibit a beneficiary from transferring the beneficiary’s interest;
b. to limit the distribution of income or principal for the supportonly of a beneficiary;
c. to prohibit creditors from reaching a beneficiary’s interest;
d. to allow a trustee to use their discretion in distribution to a particular beneficiary;
e. All of the above.