Question 1

An asset that would not be a part of the probate estate is

Accepted Answer

A)  life insurance without a named beneficiary, 
B)  the decedent's real property, 
C)  the decedent's personal property, 
D)  jointly owned property left with the right of survivorship. 
A)  life insurance without a named beneficiary, 
B)  the decedent's real property, 
C)  the decedent's personal property, 
D)  jointly owned property left with the right of survivorship. D

Question 2

In 2004, the operation of the unified transfer tax credit had the practical effect of exempting the first $1,500,000 of otherwise taxable transfers from federal transfer taxation.

Accepted Answer

A) True 
 B)False  True

Question 3

Match the descriptions with their terms:
-A/An ________________ is the person or organization that holds legal ownership to trust property and is responsible for the administration of the trust assets.

Accepted Answer

A)  administrator 
B)  charitable deduction 
C)  credit shelter trust 
D)  decedent 
E)  estate tax
F) Financial planning
G) inheritance tax
H) inter vivos
I) intestate
J) living trust
K) marital deduction
L) net payment index
M) Probate
N) probate court
O) surrender cost index
P) testamentary trust
Q) trustee
R) unified transfer tax credit 
A)  administrator 
B)  charitable deduction 
C)  credit shelter trust 
D)  decedent 
E)  estate tax
F) Financial planning
G) inheritance tax
H) inter vivos
I) intestate
J) living trust
K) marital deduction
L) net payment index
M) Probate
N) probate court
O) surrender cost index
P) testamentary trust
Q) trustee
R) unified transfer tax credit Q

Question 4

Match the descriptions with their terms:
-A/An ________________ is created during the life of the grantor.

Accepted Answer

A)  administrator 
B)  charitable deduction 
C)  credit shelter trust 
D)  decedent 
E)  estate tax
F) Financial planning
G) inheritance tax
H) inter vivos
I) intestate
J) living trust
K) marital deduction
L) net payment index
M) Probate
N) probate court
O) surrender cost index
P) testamentary trust
Q) trustee
R) unified transfer tax credit 
A)  administrator 
B)  charitable deduction 
C)  credit shelter trust 
D)  decedent 
E)  estate tax
F) Financial planning
G) inheritance tax
H) inter vivos
I) intestate
J) living trust
K) marital deduction
L) net payment index
M) Probate
N) probate court
O) surrender cost index
P) testamentary trust
Q) trustee
R) unified transfer tax credit

Question 5

Match the descriptions with their terms:
-A/An ________________ is appointed by a court to oversee the administration of the estate of a decedent who died without a valid will.

Accepted Answer

A)  administrator 
B)  charitable deduction 
C)  credit shelter trust 
D)  decedent 
E)  estate tax
F) Financial planning
G) inheritance tax
H) inter vivos
I) intestate
J) living trust
K) marital deduction
L) net payment index
M) Probate
N) probate court
O) surrender cost index
P) testamentary trust
Q) trustee
R) unified transfer tax credit 
A)  administrator 
B)  charitable deduction 
C)  credit shelter trust 
D)  decedent 
E)  estate tax
F) Financial planning
G) inheritance tax
H) inter vivos
I) intestate
J) living trust
K) marital deduction
L) net payment index
M) Probate
N) probate court
O) surrender cost index
P) testamentary trust
Q) trustee
R) unified transfer tax credit

Question 6

The primary estate planning objective of holding property in a manner that will escape inclusion of the probate estate involves

Accepted Answer

A)  avoidance of federal and state transfer taxes, 
B)  reducing administrative costs and delays often associated with the probate process, 
C)  avoidance of the claims of creditors, 
D)  escaping the expense associated with writing a valid will. 
A)  avoidance of federal and state transfer taxes, 
B)  reducing administrative costs and delays often associated with the probate process, 
C)  avoidance of the claims of creditors, 
D)  escaping the expense associated with writing a valid will.

Question 7

Match the descriptions with their terms:
-A/An ________________ is allowed for the value of all qualified transfers to the decedent's spouse.

Accepted Answer

A)  administrator 
B)  charitable deduction 
C)  credit shelter trust 
D)  decedent 
E)  estate tax
F) Financial planning
G) inheritance tax
H) inter vivos
I) intestate
J) living trust
K) marital deduction
L) net payment index
M) Probate
N) probate court
O) surrender cost index
P) testamentary trust
Q) trustee
R) unified transfer tax credit 
A)  administrator 
B)  charitable deduction 
C)  credit shelter trust 
D)  decedent 
E)  estate tax
F) Financial planning
G) inheritance tax
H) inter vivos
I) intestate
J) living trust
K) marital deduction
L) net payment index
M) Probate
N) probate court
O) surrender cost index
P) testamentary trust
Q) trustee
R) unified transfer tax credit

Question 8

Gifts can be used to reduce the amount of transfer taxes by

Accepted Answer

A)  shifting the property to those in a lower income tax bracket, 
B)  transferring a revocable future interest in the property, 
C)  taking advantage of the $11,000 per donee per year gift tax exclusion, 
D)  gifts can no longer be used to reduce transfer taxation because of the unification of the federal estate and gift tax systems. 
A)  shifting the property to those in a lower income tax bracket, 
B)  transferring a revocable future interest in the property, 
C)  taking advantage of the $11,000 per donee per year gift tax exclusion, 
D)  gifts can no longer be used to reduce transfer taxation because of the unification of the federal estate and gift tax systems.

Question 9

The most commonly used source to rate the financial strength of life insurers is the publication Best's Insurance Reports, issued annually by A.M. Best Company.

Accepted Answer

A) True 
 B)False

Question 10

Match the descriptions with their terms:
-A/An ________________ decides on the authenticity and validity of a will, appoints an executor, and oversees the work of the executor.

Accepted Answer

A)  administrator 
B)  charitable deduction 
C)  credit shelter trust 
D)  decedent 
E)  estate tax
F) Financial planning
G) inheritance tax
H) inter vivos
I) intestate
J) living trust
K) marital deduction
L) net payment index
M) Probate
N) probate court
O) surrender cost index
P) testamentary trust
Q) trustee
R) unified transfer tax credit 
A)  administrator 
B)  charitable deduction 
C)  credit shelter trust 
D)  decedent 
E)  estate tax
F) Financial planning
G) inheritance tax
H) inter vivos
I) intestate
J) living trust
K) marital deduction
L) net payment index
M) Probate
N) probate court
O) surrender cost index
P) testamentary trust
Q) trustee
R) unified transfer tax credit

Question 11

Match the descriptions with their terms:
-A/An ________________ trust is another term for a living trust.

Accepted Answer

A)  administrator 
B)  charitable deduction 
C)  credit shelter trust 
D)  decedent 
E)  estate tax
F) Financial planning
G) inheritance tax
H) inter vivos
I) intestate
J) living trust
K) marital deduction
L) net payment index
M) Probate
N) probate court
O) surrender cost index
P) testamentary trust
Q) trustee
R) unified transfer tax credit 
A)  administrator 
B)  charitable deduction 
C)  credit shelter trust 
D)  decedent 
E)  estate tax
F) Financial planning
G) inheritance tax
H) inter vivos
I) intestate
J) living trust
K) marital deduction
L) net payment index
M) Probate
N) probate court
O) surrender cost index
P) testamentary trust
Q) trustee
R) unified transfer tax credit

Question 12

Another term for the surrender cost index is the net payment index.

Accepted Answer

A) True 
 B)False

Question 13

Financial planning is a subset of estate planning.

Accepted Answer

A) True 
 B)False

Question 14

Inheritance taxes are levied by states.

Accepted Answer

A) True 
 B)False

Question 15

Financial planning primarily focuses on choosing between investment opportunities.

Accepted Answer

A) True 
 B)False

Question 16

Match the descriptions with their terms:
-The ________________ is computed for the Nth year through the use of the following formula: (P - D - CV) / A, where P is the accumulated premiums for N years, D is the accumulated dividends for N years, CV is the cash value at the end of N years, and A is the accumulated value of an annuity of $1 for N years.

Accepted Answer

A)  administrator 
B)  charitable deduction 
C)  credit shelter trust 
D)  decedent 
E)  estate tax
F) Financial planning
G) inheritance tax
H) inter vivos
I) intestate
J) living trust
K) marital deduction
L) net payment index
M) Probate
N) probate court
O) surrender cost index
P) testamentary trust
Q) trustee
R) unified transfer tax credit 
A)  administrator 
B)  charitable deduction 
C)  credit shelter trust 
D)  decedent 
E)  estate tax
F) Financial planning
G) inheritance tax
H) inter vivos
I) intestate
J) living trust
K) marital deduction
L) net payment index
M) Probate
N) probate court
O) surrender cost index
P) testamentary trust
Q) trustee
R) unified transfer tax credit

Question 17

Which of the following statements when taken alone has the greatest weight when determining the financial strength of a life insurer?

Accepted Answer

A)  The company has assets of more than $1 billion, 
B)  Last year the insurer paid a relatively high policy dividend on all participating policies, 
C)  Last year the company had a surplus of more than $1 million, 
D)  The insurer currently enjoys an A+ Best's rating. 
A)  The company has assets of more than $1 billion, 
B)  Last year the insurer paid a relatively high policy dividend on all participating policies, 
C)  Last year the company had a surplus of more than $1 million, 
D)  The insurer currently enjoys an A+ Best's rating.

Question 18

A life insurance trust generally is established by naming the insurer as the beneficiary of a life insurance policy, for the benefit of named trust beneficiaries.

Accepted Answer

A) True 
 B)False

Question 19

Match the descriptions with their terms:
-A/An ________________ is a trust created by a will.

Accepted Answer

A)  administrator 
B)  charitable deduction 
C)  credit shelter trust 
D)  decedent 
E)  estate tax
F) Financial planning
G) inheritance tax
H) inter vivos
I) intestate
J) living trust
K) marital deduction
L) net payment index
M) Probate
N) probate court
O) surrender cost index
P) testamentary trust
Q) trustee
R) unified transfer tax credit 
A)  administrator 
B)  charitable deduction 
C)  credit shelter trust 
D)  decedent 
E)  estate tax
F) Financial planning
G) inheritance tax
H) inter vivos
I) intestate
J) living trust
K) marital deduction
L) net payment index
M) Probate
N) probate court
O) surrender cost index
P) testamentary trust
Q) trustee
R) unified transfer tax credit

Question 20

Which of the following statements is true regarding a life insurance trust?

Accepted Answer

A)  The life insurer functions as the trustee, 
B)  Life insurance trusts may provide more flexibility than the payout options offered by the insurer, 
C)  The life insurer functions as the donor, 
D)  Life insurance trusts have as their sole purpose the avoidance of federal estate taxation. 
A)  The life insurer functions as the trustee, 
B)  Life insurance trusts may provide more flexibility than the payout options offered by the insurer, 
C)  The life insurer functions as the donor, 
D)  Life insurance trusts have as their sole purpose the avoidance of federal estate taxation.

Exam 21: Financial and Estate Planning

An asset that would not be a part of the probate estate is

In 2004, the operation of the unified transfer tax credit had the practical effect of exempting the first $1,500,000 of otherwise taxable transfers from federal transfer taxation.

Match the descriptions with their terms: -A/An ________________ is the person or organization that holds legal ownership to trust property and is responsible for the administration of the trust assets.

Match the descriptions with their terms: -A/An ________________ is created during the life of the grantor.

Match the descriptions with their terms: -A/An ________________ is appointed by a court to oversee the administration of the estate of a decedent who died without a valid will.

The primary estate planning objective of holding property in a manner that will escape inclusion of the probate estate involves

Match the descriptions with their terms: -A/An ________________ is allowed for the value of all qualified transfers to the decedent's spouse.

Gifts can be used to reduce the amount of transfer taxes by

The most commonly used source to rate the financial strength of life insurers is the publication Best's Insurance Reports, issued annually by A.M. Best Company.

Match the descriptions with their terms: -A/An ________________ decides on the authenticity and validity of a will, appoints an executor, and oversees the work of the executor.

Match the descriptions with their terms: -A/An ________________ trust is another term for a living trust.

Another term for the surrender cost index is the net payment index.

Financial planning is a subset of estate planning.

Inheritance taxes are levied by states.

Financial planning primarily focuses on choosing between investment opportunities.

Which of the following statements when taken alone has the greatest weight when determining the financial strength of a life insurer?

A life insurance trust generally is established by naming the insurer as the beneficiary of a life insurance policy, for the benefit of named trust beneficiaries.

Match the descriptions with their terms: -A/An ________________ is a trust created by a will.

Which of the following statements is true regarding a life insurance trust?

Introduction to Risk

Risk Identification and Evaluation

Property and Liability Loss Exposures

Life, Health, and Loss of Income Exposures

Risk Management Techniques: Noninsurance Methods

Insurance As a Risk Management Technique: Principles

Insurance As a Risk Management Technique: Policy Provisions

Selecting and Implementing Risk Management Techniques

Risk Management and Commercial Propertypart I

Risk Management and Commercial Propertypart II

Risk Management and Commercial Liability Risk

Workers Compensation and Alternative Risk Financing

Risk Management for Auto Ownerspart I

Risk Management for Auto Ownerspart II

Risk Management for Homeowners

Loss of Life

Loss of Health

Retirement Planning and Annuities

Employee Benefits: Life and Health Benefits

Employee Benefits: Retirement Plans

Risk Management and the Insurance Industry

Functions and Organization of Insurers

Government Regulation of Risk Management and Insurance

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