CES Ethics & Legal Compliance 2

Question 1

A CES professional learns that a colleague is recommending unsuitable estate planning products to elderly clients to earn higher commissions. What is the ethically required response?

Accepted Answer

Report the misconduct to the appropriate regulatory or firm compliance authority

Answer

Ethical standards require practitioners to report known misconduct that harms clients, not merely avoid it personally.

Question 2

Under UPIA (Uniform Prudent Investor Act), a trustee must balance which two primary considerations when managing trust investments?

Accepted Answer

Risk and return in the context of the trust's overall purpose

Answer

UPIA requires trustees to balance risk and return relative to the trust's purposes and beneficiaries' needs.

Question 3

A trustee who fails to diversify trust assets without a specific reason to do so may be held liable for which type of breach?

Accepted Answer

Breach of the prudent investor standard

Answer

The prudent investor standard includes a duty to diversify unless circumstances of the trust dictate otherwise.

Question 4

When a CES practitioner becomes aware of a client's diminished mental capacity, what is the primary ethical obligation?

Accepted Answer

Continue normal service while documenting capacity concerns and consulting with appropriate parties

Answer

Practitioners must document concerns, consider involving qualified parties (e.g., healthcare professionals or attorneys), and act in the client's best interest.

Question 5

Which ethical principle prohibits a CES professional from using confidential client information for personal financial gain?

Accepted Answer

Duty of loyalty

Answer

The duty of loyalty requires professionals to place client interests first, prohibiting self-dealing with confidential information.

(CES) Certified Estate and Trust Specialist Practice Test

(CES) Certified Estate and Trust Specialist Practice Test

CES Ethics & Legal Compliance 2