Financial Advisor Personal Financial Advisor 4

Question 1

What is the annual gift tax exclusion amount per recipient for 2024?

Accepted Answer

$18,000

Answer

The annual gift tax exclusion for 2024 is $18,000 per recipient, allowing gifts up to this amount without using the lifetime exemption.

Question 2

A client has $100,000 in credit card debt at 22% APR and $80,000 in a savings account earning 4.5%. What should the advisor recommend first?

Accepted Answer

Pay off the high-interest credit card debt using savings funds

Answer

Paying off 22% APR debt with savings earning 4.5% provides a guaranteed 22% 'return,' far exceeding any savings or investment rate.

Question 3

What is the step-up in cost basis rule for inherited assets?

Accepted Answer

The cost basis of inherited assets is reset to fair market value at the date of death

Answer

Inherited assets receive a step-up in cost basis to the fair market value on the date of the original owner's death, eliminating capital gains tax on appreciation during the decedent's lifetime.

Question 4

Which type of annuity provides a guaranteed income stream that cannot be outlived but has no residual value for heirs?

Accepted Answer

Immediate life-only annuity

Answer

A life-only immediate annuity pays income for as long as the annuitant lives but ceases at death, leaving nothing for beneficiaries.

Question 5

What is the primary advantage of a Health Savings Account (HSA) over a Flexible Spending Account (FSA)?

Accepted Answer

HSA funds roll over indefinitely and can be invested for long-term growth

Answer

Unlike FSAs, HSA funds roll over each year without a use-it-or-lose-it rule, can be invested, and accumulate tax-free for future medical or retirement expenses.

Financial Advisor Practice Test

Financial Advisor Practice Test

Financial Advisor Personal Financial Advisor 4