CES Ethical Standards & Professional Conduct 3

Question 1

A CES professional serves as trustee and also receives commissions from insurance products sold to the trust. This arrangement MOST likely violates which duty?

Accepted Answer

Duty to avoid conflicts of interest

Answer

Receiving undisclosed commissions on products sold to a trust one administers is a classic conflict of interest that violates fiduciary duty.

Question 2

When a CES professional is uncertain whether a client action is legal, the BEST course of action is to:

Accepted Answer

Seek legal counsel or refer the matter to an attorney before proceeding

Answer

When legal uncertainty arises, CES professionals must seek qualified legal guidance before taking action to avoid facilitating potential violations.

Question 3

Which standard requires a CES professional to keep accurate and complete records of all trust transactions?

Accepted Answer

Duty to account

Answer

The duty to account requires trustees and fiduciaries to maintain complete, accurate records and provide periodic accountings to beneficiaries.

Question 4

A beneficiary requests copies of all trust investment records. A CES professional acting as trustee should GENERALLY:

Accepted Answer

Provide the requested information unless a valid legal basis exists to withhold it

Answer

Beneficiaries are generally entitled to trust information, and a trustee must provide it unless a specific legal provision or court order justifies withholding.

Question 5

What does the prudent investor rule primarily govern for a CES trustee?

Accepted Answer

The standard of care applied to investment decisions for trust assets

Answer

The prudent investor rule requires trustees to invest trust assets with the care, skill, and caution of a prudent investor, considering risk and return in the context of the whole portfolio.

(CES) Certified Estate and Trust Specialist Practice Test

(CES) Certified Estate and Trust Specialist Practice Test

CES Ethical Standards & Professional Conduct 3