STEP Client Advisory & Consultation 3

Question 1

A client with assets in multiple jurisdictions asks about the most appropriate trust situs. Which factor typically carries the MOST weight in this determination?

Accepted Answer

A combination of legal environment, tax treatment, and the trust's purpose and beneficiary locations

Answer

Situs selection requires holistic analysis of legal framework, tax efficiency, political stability, and alignment with the trust's objectives and stakeholders.

Question 2

A client requests advice on using a Qualifying Domestic Trust (QDOT) in their estate plan. This structure is most relevant when:

Accepted Answer

The surviving spouse is not a U.S. citizen and the couple wants to defer estate tax

Answer

A QDOT allows a non-U.S. citizen surviving spouse to benefit from the estate tax marital deduction by deferring estate tax until distributions or death.

Question 3

When should a practitioner recommend reviewing or updating an existing estate plan?

Accepted Answer

Following major life events such as marriage, divorce, birth of a child, or significant asset changes

Answer

Estate plans should be reviewed after major life events that may affect the client's objectives, family structure, or asset base.

Question 4

A practitioner suspects that a client is being financially exploited by a family member who accompanies them to every meeting and answers questions on the client's behalf. What is the best response?

Accepted Answer

Insist on meeting with the client alone to assess their instructions and capacity independently

Answer

Best practice requires meeting privately with vulnerable clients to assess undue influence and ensure instructions genuinely reflect the client's own wishes.

Question 5

Which of the following BEST describes the 'know your client' (KYC) obligation in a trust and estate context?

Accepted Answer

Understanding the client's full financial picture, family structure, objectives, and risk tolerance

Answer

KYC in estate planning encompasses AML identity checks plus a comprehensive understanding of financial circumstances, family dynamics, and planning goals.

(STEP) Society of Trust and Estate Practitioners Certification Practice Test

(STEP) Society of Trust and Estate Practitioners Certification Practice Test

STEP Client Advisory & Consultation 3