FREE APP Trusts, Estates & Financial Instruments Questions and Answers

Question 1

What is the primary purpose of a trust in asset protection?

Accepted Answer

Shield assets from liabilities

Answer

Avoid insurance costs

Answer

Minimize investment risk

Answer

Earn higher interest

Question 2

Which type of trust becomes effective only upon the grantor's death?

Accepted Answer

Testamentary trust

Answer

Living trust

Answer

Revocable trust

Answer

Charitable trust

Question 3

Which document specifies how assets are distributed after death?

Accepted Answer

Will

Answer

Power of attorney

Answer

Living will

Answer

Revocation agreement

Question 4

What is a key benefit of using financial instruments like annuities?

Accepted Answer

Tax-deferred income

Answer

Immediate cash access

Answer

Asset depreciation

Answer

Penalty avoidance

Question 5

Who manages the assets in a trust?

Accepted Answer

Trustee

Answer

Beneficiary

Answer

Heir

Answer

Executor

Question 6

Which of the following helps avoid probate?

Accepted Answer

Living trust

Answer

Power of attorney

Answer

Life insurance

Answer

Retirement account

Question 7

What type of account allows tax-deferred growth for retirement savings?

Accepted Answer

IRA

Answer

Money market account

Answer

Savings bond

Answer

Checking account

Question 8

Which legal role involves carrying out a deceased person’s will?

Accepted Answer

Executor

Answer

Notary

Answer

Trustee

Answer

Grantor

Question 9

What does diversification help achieve in investment planning?

Accepted Answer

Spread investment risk

Answer

Increase fees

Answer

Limit growth

Answer

Avoid taxes