Ethics & Legal Compliance Flashcards
7 cards from real CES practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Ethics & Legal Compliance flashcards as text
A CES practitioner receives a gift worth $300 from a grateful estate client. Under most professional ethics codes, what is the best course of action?
Answer: Accept and disclose it to the firm's compliance department
Most compliance frameworks require disclosure of gifts above de minimis thresholds; accepting without disclosure is improper.
Which federal law imposes a fiduciary standard on financial advisors who manage retirement plan assets within estates?
Answer: ERISA (Employee Retirement Income Security Act)
ERISA governs retirement plan assets and imposes strict fiduciary duties on those managing such assets.
An estate planning client asks a CES professional to back-date a document to qualify for a tax benefit that has already expired. The practitioner should:
Answer: Refuse because backdating documents constitutes fraud
Backdating documents to misrepresent dates for tax purposes is fraudulent and violates both legal and ethical standards.
The 'no further inquiry' rule in trust law applies most directly to which situation?
Answer: When a trustee engages in a transaction that benefits themselves at trust expense
The no-further-inquiry rule presumes a conflict-of-interest transaction is a breach without requiring proof of actual harm.
A CES practitioner suspects a client may be the victim of financial elder abuse by a family member. What is the appropriate first step?
Answer: Report suspicions to Adult Protective Services or the appropriate authority per applicable law
Most states require or permit financial professionals to report suspected elder financial abuse to protective services.
Which document must a trustee provide to beneficiaries under the Uniform Trust Code to fulfill the duty to inform and report?
Answer: Periodic accountings showing trust assets, income, expenses, and distributions
The UTC requires trustees to provide regular accountings so beneficiaries can monitor administration.
A CES professional serves as both a financial advisor and a trustee for the same client family. This arrangement primarily raises concerns about:
Answer: Conflict of interest and divided loyalty between roles
Serving dual roles creates conflicts where the advisor's financial interests may diverge from fiduciary duties as trustee.