AEP Fiduciary Responsibilities & Professional Collaboration 2

Question 1

An AEP serving as a trustee discovers that a co-trustee has been self-dealing by purchasing trust assets at below-market prices. What is the AEP's primary fiduciary obligation?

Accepted Answer

Notify the beneficiaries and take steps to remedy the breach

Answer

A trustee who discovers a co-trustee's breach of fiduciary duty must take reasonable steps to remedy the breach and notify beneficiaries, as inaction can constitute a separate breach.

Question 2

When an attorney, CPA, and financial advisor collaborate on an estate plan, which professional bears primary responsibility for ensuring the legal documents accurately reflect the client's intent?

Accepted Answer

The attorney who drafts and is responsible for the legal documents

Answer

The drafting attorney bears primary responsibility for ensuring legal documents accurately reflect the client's intent, as document preparation constitutes legal practice.

Question 3

A fiduciary learns that a beneficiary plans to use a trust distribution to fund an illegal activity. What is the most appropriate response?

Accepted Answer

Seek legal counsel and potentially withhold distribution pending court guidance

Answer

A fiduciary faced with distributions that may facilitate illegal activity should seek legal counsel and may petition the court for instructions rather than distributing or unilaterally withholding funds.

Question 4

In a multi-disciplinary estate planning team, an AEP detects a significant discrepancy between the client's stated risk tolerance and the investment strategy recommended by the investment advisor. The AEP's best course of action is to:

Accepted Answer

Document the concern and raise it directly with the team and the client

Answer

An AEP should document the discrepancy and raise it with both the team and the client, ensuring the client's best interests are served through collaborative communication.

Question 5

Which of the following best describes the 'duty of impartiality' as it applies to a trustee administering a trust with both income beneficiaries and remainder beneficiaries?

Accepted Answer

Balancing investment and distribution decisions so neither class of beneficiaries is unreasonably favored

Answer

The duty of impartiality requires a trustee to balance the competing interests of income and remainder beneficiaries rather than favoring one class over the other.

(AEP) Accredited Estate Planner Practice Test

(AEP) Accredited Estate Planner Practice Test

AEP Fiduciary Responsibilities & Professional Collaboration 2