Financial Advisor Certified Trust and Financial Advisor 4

Question 1

A Special Needs Trust (SNT) is structured to provide supplemental support to a disabled beneficiary without disqualifying them from:

Accepted Answer

Government benefit programs like Medicaid and SSI

Answer

A properly drafted SNT supplements government benefits without counting as available resources that would disqualify the beneficiary from Medicaid or SSI.

Question 2

The Uniform Prudent Investor Act (UPIA) emphasizes that investment decisions should be evaluated:

Accepted Answer

In the context of the entire portfolio and overall strategy

Answer

UPIA adopts modern portfolio theory, evaluating each investment's risk and return in the context of the overall portfolio, not in isolation.

Question 3

A dynasty trust is designed primarily to:

Accepted Answer

Pass wealth across multiple generations while minimizing transfer taxes

Answer

Dynasty trusts are long-term trusts structured to pass assets through multiple generations while using the GST tax exemption to minimize transfer taxes.

Question 4

Which trust type allows the settlor to retain an annuity for a fixed term, with the remainder passing to heirs at a reduced gift tax cost?

Accepted Answer

Grantor Retained Annuity Trust (GRAT)

Answer

A GRAT allows the grantor to receive fixed annuity payments for a set term; if the grantor outlives the term, the remaining assets pass to heirs with little or no gift tax.

Question 5

A trustee who delegates investment management to an outside advisor is still responsible for:

Accepted Answer

Selecting a qualified advisor, setting scope, and monitoring performance

Answer

Under the duty to delegate, a trustee must prudently select the agent, define their scope, and monitor their performance on an ongoing basis.

Financial Advisor Practice Test

Financial Advisor Practice Test

Financial Advisor Certified Trust and Financial Advisor 4