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. When a STEP member is uncertain whether a client has testamentary capacity, what is the most appropriate initial action? → Obtain a formal medical assessment of capacity before taking instructions
2. Why is customer segmentation important for market strategy? → It enables targeted approaches that address specific needs of different groups
3. Which of the following best describes a testamentary trust? → A trust created by a will upon death
4. What market trend has led to increased use of Private Placement Life Insurance (PPLI) in wealth planning? → Demand for tax-efficient investment wrappers for ultra-HNW clients
5. 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)
6. In analyzing wealth management industry consolidation trends, what has been the primary driver of mergers among trust companies? → Technology investment costs and compliance burdens favoring larger institutions
7. Under the Prudent Investor Rule, a trustee who delegates investment management to an outside manager remains liable unless the trustee: → Selects the agent prudently, establishes the scope of authority, and monitors performance
8. A Special Needs Trust (SNT) is designed primarily to: → Supplement government benefits without disqualifying the beneficiary from Medicaid or SSI
9. Which portfolio construction concept states that combining assets with low or negative correlations reduces overall portfolio risk? → Modern Portfolio Theory (MPT)
10. An estate claims a deduction under IRC Section 642(g) for funeral and administration expenses. These same expenses: → May be deducted on the estate's Form 1041 only if not claimed on Form 706
11. Which regulatory trend reflects increased focus on anti-money laundering (AML) compliance specifically within the trust sector? → FinCEN's beneficial ownership reporting requirements expanding to include certain trusts
12. Under US law, which document most effectively protects trust assets from a beneficiary's future creditors? → A discretionary spendthrift trust
13. A STEP member advising on trust portfolio strategy recommends 'tactical asset allocation.' This approach differs from strategic asset allocation in that it: → Makes short-term adjustments to the allocation based on market conditions or forecasts
14. A STEP member acting as executor discovers the deceased's estate contains assets not mentioned in the will. The ethical obligation is to: → Investigate and apply the correct intestacy or residuary rules to those assets
15. 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
16. What role does a financial power of attorney serve in estate planning? → It enables financial decision-making for another
17. Under the Uniform Trust Code, which party has standing to enforce a charitable trust when no specific beneficiary exists? → The state attorney general
18. What is the first step in the risk management process? → Identify potential risks through systematic analysis
19. 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
20. A decedent owned property jointly with right of survivorship with a non-spouse. What portion of the property's value is included in the decedent's gross estate? → 100% minus the portion attributable to the survivor's original contribution
21. 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
22. Why is a living trust often used in estate planning? → To bypass probate court
23. A trustee of a charitable remainder trust (CRT) fails to file Form 5227 with the IRS for three consecutive years. The most serious consequence is: → $10 per day penalty up to $5,000 per return
24. Under the Uniform Prudent Investor Act (UPIA), which factor is NOT explicitly listed as relevant to a trustee's investment decisions? → The beneficiary's personal tax bracket
25. What is the primary purpose of financial analysis in professional practice? → To evaluate financial health and support informed decision-making
26. Which trust structure is specifically designed to hold S corporation stock without disqualifying the S election? → Qualified Subchapter S Trust (QSST) or Electing Small Business Trust (ESBT)
27. A STEP member is asked to act as both trustee and solicitor for the same trust. Which ethical principle is most at risk? → Independence and objectivity
28. 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
29. 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
30. 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