CPB CPB Estate Planning & Trust Services

Question 1

What is the primary purpose of a revocable living trust in a private banker's estate planning toolkit?

Accepted Answer

Avoid probate and provide seamless asset management continuity at incapacity or death

Answer

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.

Question 2

When a client dies without a valid will, which legal framework determines how their assets are distributed?

Accepted Answer

Intestate succession laws of the state where the decedent resided

Answer

Intestate succession laws dictate asset distribution when someone dies without a will, typically prioritizing spouses, children, and then more distant relatives.

Question 3

Which trust vehicle is most commonly used to hold life insurance policies outside of the insured's taxable estate?

Accepted Answer

Irrevocable Life Insurance Trust (ILIT)

Answer

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.

Question 4

What is a pour-over will in estate planning?

Accepted Answer

A will that automatically transfers any probate assets into an existing trust at the testator's death

Answer

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.

Question 5

In a trust arrangement, what is the primary legal duty of a trustee?

Accepted Answer

To manage and administer trust assets prudently for the benefit of the named beneficiaries

Answer

A trustee holds fiduciary duties including loyalty, prudent management, impartiality, and accounting, all in the best interests of the trust beneficiaries.

CPB - Certified Private Banker Practice Test

CPB - Certified Private Banker Practice Test

CPB CPB Estate Planning & Trust Services