AEP Fiduciary Responsibilities & Professional Collaboration 3

Question 1

Under the Uniform Prudent Investor Act (UPIA), which factor is NOT among those a trustee must consider when making investment decisions?

Accepted Answer

The personal investment preferences of the trustee

Answer

The UPIA requires trustees to consider economic conditions, portfolio context, and tax consequences, but a trustee's personal investment preferences are irrelevant and may constitute a conflict of interest.

Question 2

When a CPA in an estate planning team identifies a potential tax-saving strategy that would also require restructuring the client's business entity, the most appropriate professional collaboration step is to:

Accepted Answer

Share the strategy with the attorney and business advisor before presenting to the client

Answer

Effective professional collaboration requires the CPA to share identified strategies with the full team—attorney and business advisor—before presenting to ensure legal, operational, and planning alignment.

Question 3

A fiduciary holds a trust with a spendthrift provision. A creditor of the income beneficiary demands that the trustee redirect income distributions directly to them. The trustee should:

Accepted Answer

Refuse the demand, as spendthrift provisions generally protect trust distributions from creditor claims prior to receipt

Answer

A valid spendthrift provision prevents creditors from attaching trust distributions before the beneficiary actually receives them, so the trustee should refuse the creditor's demand.

Question 4

An AEP who is also a licensed insurance agent recommends a client purchase a life insurance policy that pays the AEP a significant commission. This situation primarily raises which fiduciary concern?

Accepted Answer

Breach of the duty of loyalty due to a conflict of interest

Answer

Recommending a product that generates personal compensation for the fiduciary is a classic conflict of interest that implicates the duty of loyalty, requiring full disclosure or recusal.

Question 5

In estate planning team meetings, which practice best supports each professional's independent ethical obligations while promoting effective collaboration?

Accepted Answer

Maintaining separate client engagement letters that define each professional's distinct role and responsibilities

Answer

Separate engagement letters that clearly define each professional's role protect independent ethical duties, establish individual accountability, and prevent scope-of-practice confusion.

(AEP) Accredited Estate Planner Practice Test

(AEP) Accredited Estate Planner Practice Test

AEP Fiduciary Responsibilities & Professional Collaboration 3