CPB Estate Planning & Trust Services Flashcards
6 cards from real CPB practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CPB Estate Planning & Trust Services flashcards as text
What is the primary purpose of a revocable living trust in a private banker's estate planning toolkit?
Answer: Avoid probate and provide seamless asset management continuity at incapacity or death
A revocable living trust allows assets to pass to beneficiaries without going through probate, while also enabling a successor trustee to manage assets during the grantor's incapacity.
When a client dies without a valid will, which legal framework determines how their assets are distributed?
Answer: Intestate succession laws of the state where the decedent resided
Intestate succession laws dictate asset distribution when someone dies without a will, typically prioritizing spouses, children, and then more distant relatives.
Which trust vehicle is most commonly used to hold life insurance policies outside of the insured's taxable estate?
Answer: Irrevocable Life Insurance Trust (ILIT)
An ILIT owns a life insurance policy so that the death benefit is excluded from the insured's estate, preserving the full proceeds for beneficiaries free of estate tax.
What is a pour-over will in estate planning?
Answer: A will that automatically transfers any probate assets into an existing trust at the testator's death
A pour-over will acts as a safety net by directing any assets not already in a trust to 'pour over' into the decedent's revocable living trust upon death.
In a trust arrangement, what is the primary legal duty of a trustee?
Answer: To manage and administer trust assets prudently for the benefit of the named beneficiaries
A trustee holds fiduciary duties including loyalty, prudent management, impartiality, and accounting, all in the best interests of the trust beneficiaries.
Which estate planning trust is specifically designed to protect a beneficiary's inheritance from being seized by their creditors or in a divorce?
Answer: Spendthrift trust
A spendthrift trust restricts the beneficiary's ability to assign their interest and prevents creditors from attaching trust assets before they are distributed.