Financial Advisor Certified Trust and Financial Advisor 5

Question 1

A Qualified Domestic Relations Order (QDRO) is used in trust and estate planning to:

Accepted Answer

Divide retirement plan benefits between divorcing spouses

Answer

A QDRO is a court order that assigns a portion of a retirement plan participant's benefits to an alternate payee, typically a former spouse.

Question 2

The 'no-contest' (in terrorem) clause in a trust is intended to discourage beneficiaries from:

Accepted Answer

Challenging the validity of the trust instrument

Answer

An in terrorem clause forfeits a beneficiary's interest if they contest the trust, discouraging frivolous legal challenges.

Question 3

A trust protector's role in a modern trust most commonly includes the power to:

Accepted Answer

Modify trust terms to adapt to changed laws or circumstances

Answer

Trust protectors are granted specific powers such as amending trust terms to respond to tax law changes or changed family circumstances.

Question 4

When total return unitrust (TRU) distributions are used instead of traditional income distributions, the trustee distributes:

Accepted Answer

A fixed percentage of the trust's total fair market value annually

Answer

A total return unitrust pays out a set percentage (typically 3–5%) of the trust's total fair market value each year, regardless of whether returns are income or appreciation.

Question 5

A trustee's duty to keep accurate records and provide accountings to beneficiaries falls under which fiduciary obligation?

Accepted Answer

Duty to inform and report

Answer

The duty to inform and report requires trustees to keep beneficiaries reasonably informed about trust administration and to provide periodic accountings.

Financial Advisor Practice Test

Financial Advisor Practice Test

Financial Advisor Certified Trust and Financial Advisor 5