STEP Cheat Sheet 2026

The 30 highest-yield STEP facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. Why is customer segmentation important for market strategy? → It enables targeted approaches that address specific needs of different groups
2. Which of the following best describes a testamentary trust? → A trust created by a will upon death
3. Which type of trust structure is specifically designed to mitigate estate tax risk for married couples while retaining access to assets? → Spousal Lifetime Access Trust (SLAT)
4. Under US law, which document most effectively protects trust assets from a beneficiary's future creditors? → A discretionary spendthrift trust
5. Under the Uniform Trust Code, which document must be executed with the same formalities as a will when creating a testamentary trust? → The decedent's last will and testament
6. What role does a financial power of attorney serve in estate planning? → It enables financial decision-making for another
7. What is the first step in the risk management process? → Identify potential risks through systematic analysis
8. For estate planning purposes, what is the critical legal requirement for a valid holographic will in states that recognize them? → The material provisions and signature must be in the testator's own handwriting
9. In the context of trustee record-keeping obligations, which standard best describes the documentation a trustee must maintain under the Uniform Trust Code §813? → Complete records of trust property, liabilities, receipts, and disbursements
10. Why is a living trust often used in estate planning? → To bypass probate court
11. What is the primary purpose of financial analysis in professional practice? → To evaluate financial health and support informed decision-making
12. What should be done if an error is discovered in existing records? → Draw a single line through the error, note the correction, date, and initial
13. Which scenario creates an 'ethical wall' risk concern for a corporate trustee serving a trust that also holds shares in a company the bank advises? → Conflict of interest arising from the duty of loyalty
14. When assessing the risk of a trustee co-mingling trust and personal funds, which standard of liability typically applies? → Strict liability regardless of actual harm
15. What is the fundamental principle of strategic planning? → Aligning resources and actions with long-term organizational objectives
16. What is the purpose of a K-1 form in trust and estate taxation? → To distribute income details to beneficiaries
17. What documentation is required when a U.S. person receives a gift or bequest from a foreign person exceeding $100,000 in a tax year? → Form 3520, Annual Return to Report Transactions with Foreign Trusts
18. A trust owns a 40% interest in a closely held business. What is the primary liquidity risk associated with this holding? → The interest may be difficult to sell quickly at fair value to meet distribution needs
19. Which financial statement provides the best view of an organization's profitability? → The income statement showing revenues, expenses, and net profit
20. How does risk appetite influence management decisions? → It defines the level of risk an organization is willing to accept in pursuit of objectives
21. A trustee is managing a trust with both US and foreign assets. Which regulatory risk requires filing IRS Form 3520? → Transactions with foreign trusts or receipt of large foreign gifts
22. Which entity typically has authority to establish practice standards? → State licensing boards and professional regulatory bodies
23. Under the Uniform Prudent Investor Act (UPIA), which factor is NOT explicitly listed as relevant when assessing portfolio risk? → The beneficiary's personal credit score
24. Which estate planning document designates a person to make medical decisions on your behalf? → Healthcare power of attorney
25. What is residual risk? → The risk remaining after mitigation measures have been applied
26. What is the legal effect of a 'no-contest' (in terrorem) clause in a trust document under most U.S. state laws? → It disinherits a contestant who challenges the trust without probable cause
27. A trustee holds farmland as a trust asset in a state experiencing prolonged drought. Which risk category does this most directly represent? → Environmental/climate risk
28. Unrelated Business Income Tax (UBIT) does NOT apply to which of the following receipts by a tax-exempt organization? → Royalties received from licensing the organization's trademark or logo to a third party
29. Why is maintaining professional boundaries important in client relationships? → It ensures objectivity and protects both the professional and the client
30. At what minimum age may an IRA owner make a Qualified Charitable Distribution (QCD) directly from the IRA to an eligible charity? → 70½