RMA Risk Management & Estate Planning 3

Question 1

A couple has a combined estate of $28 million in 2024. What is the MOST important estate planning concern under current law?

Accepted Answer

Planning for the potential sunset of the elevated exemption after 2025

Answer

The Tax Cuts and Jobs Act's doubled exemption is scheduled to sunset after 2025, roughly halving the exemption, making proactive gifting or trust strategies urgent.

Question 2

Which long-term care insurance benefit trigger is standard in most policies?

Accepted Answer

Inability to perform 2 of 6 activities of daily living (ADLs) or severe cognitive impairment

Answer

HIPAA-compliant LTC policies require that the insured be unable to perform at least 2 of 6 ADLs or have severe cognitive impairment to qualify for tax-free benefits.

Question 3

A durable power of attorney for finances differs from a standard power of attorney in that it:

Accepted Answer

Remains effective if the principal becomes incapacitated

Answer

A durable power of attorney contains language that keeps the agent's authority intact even if the principal later becomes incapacitated, unlike a standard POA which terminates on incapacity.

Question 4

The Monte Carlo simulation technique is used in retirement planning primarily to:

Accepted Answer

Model the probability of portfolio success across thousands of market scenarios

Answer

Monte Carlo simulations run thousands of randomized market return sequences to estimate the probability that a withdrawal strategy sustains the portfolio over the retirement horizon.

Question 5

Which estate planning document expresses a person's wishes regarding end-of-life medical treatment and designates a healthcare decision-maker?

Accepted Answer

Advance healthcare directive (living will + healthcare proxy)

Answer

An advance healthcare directive combines a living will (treatment preferences) with a healthcare proxy (agent designation), covering both substantive and agent-based healthcare decisions.

RMA Practice Test

RMA Practice Test

RMA Risk Management & Estate Planning 3