AFC Retirement and Estate Planning 5

Question 1

A client over age 70½ wants to donate to charity directly from their IRA without triggering taxable income. Which strategy accomplishes this?

Accepted Answer

Qualified Charitable Distribution (QCD)

Answer

Charitable remainder trust (CRT)

Answer

Donor-advised fund (DAF)

Answer

Charitable lead trust (CLT)

Question 2

Which type of trust allows a grantor to transfer assets, receive an annuity payment for a fixed term, and pass remaining assets to beneficiaries at reduced gift tax cost?

Accepted Answer

Grantor retained annuity trust (GRAT)

Answer

Charitable remainder annuity trust (CRAT)

Answer

Spendthrift trust

Answer

Testamentary trust

Question 3

What distinguishes a 'safe harbor' 401(k) plan from a standard 401(k) plan?

Accepted Answer

Safe harbor plans automatically satisfy ADP/ACP nondiscrimination tests in exchange for mandatory employer contributions

Answer

Safe harbor plans allow higher contribution limits than standard 401(k) plans

Answer

Safe harbor plans require employees to be 100% vested immediately in all contributions

Answer

Safe harbor plans are exempt from ERISA filing requirements

Question 4

A client is concerned about Medicaid spend-down rules for nursing home care. What is the Medicaid 'look-back period' for most asset transfers?

Accepted Answer

5 years

Answer

1 year

Answer

3 years

Answer

7 years

Question 5

Which Social Security benefit is available to a divorced spouse who was married for at least 10 years, provided they are currently unmarried?

Accepted Answer

Spousal benefit up to 50% of the ex-spouse's PIA

Answer

Survivor benefit equal to 100% of ex-spouse's benefit

Answer

Disability benefit based on ex-spouse's work record

Answer

Retirement benefit equal to the ex-spouse's full benefit

Question 6

What is the purpose of a 'probate avoidance' strategy in estate planning, and which tools most commonly achieve it?

Accepted Answer

To transfer assets directly to beneficiaries outside of court supervision, using tools like trusts, beneficiary designations, and joint ownership

Answer

To reduce estate taxes by keeping assets below the federal exemption threshold

Answer

To delay distribution of assets until all debts are resolved

Answer

To ensure assets are distributed according to state intestacy laws

Question 7

A client age 60 with a traditional pension must choose between a single-life annuity of $3,000/month or a joint-and-survivor annuity of $2,400/month. What is the primary factor in this decision?

Accepted Answer

The spouse's age, health, and other retirement income sources

Answer

The client's current tax bracket

Answer

The pension plan's funding status

Answer

Whether the client has a Roth IRA