CFG Retirement Income & Estate Planning 4

Question 1

A 75-year-old client uses a reverse mortgage (HECM) to supplement retirement income. Which statement about HECMs is accurate?

Accepted Answer

The loan becomes due when the borrower permanently leaves the home

Answer

A HECM becomes due and payable when the last borrower permanently vacates the home, sells it, or passes away, not while the borrower lives there.

Question 2

Which Medicaid planning strategy involves transferring assets to a spouse in order to protect them from spend-down requirements, using the Community Spouse Resource Allowance (CSRA)?

Accepted Answer

Spousal impoverishment protection

Answer

Federal Medicaid spousal impoverishment rules allow the community (non-institutionalized) spouse to retain assets up to the CSRA without those assets being counted for the institutionalized spouse's eligibility.

Question 3

A client aged 82 owns a $500,000 annuity with a cost basis of $200,000. If she surrenders it, how is the $300,000 gain taxed?

Accepted Answer

As ordinary income in the year of surrender

Answer

Gains inside a non-qualified annuity are taxed as ordinary income when distributed, not at preferential capital gains rates.

Question 4

What is the look-back period Medicaid uses when reviewing asset transfers for potential disqualifying gifts prior to a nursing home application?

Accepted Answer

60 months

Answer

Medicaid reviews asset transfers made within the 60-month (5-year) look-back period prior to application, and gifts during that window may create a penalty period of ineligibility.

Question 5

A 70-year-old client asks about qualified longevity annuity contracts (QLACs). Which feature distinguishes a QLAC from a standard IRA annuity?

Accepted Answer

QLAC premiums are excluded from RMD calculations up to IRS limits and payments can be deferred to age 85

Answer

QLACs allow retirees to defer income to as late as age 85, and the premium used to purchase a QLAC is excluded from the RMD calculation up to IRS limits.

(CFG) Certified Financial Gerontologist Practice Test

(CFG) Certified Financial Gerontologist Practice Test

CFG Retirement Income & Estate Planning 4