ESTATE

1 of 10 *
There are several areas in which a financial planner can assist a client in
the preparation of their estate planning including determining constraints to
meeting estate planning goals. Which of the following is the least likely
way a financial planner can assist their client in meeting their estate
planning goals?
Identifying ways to structure assets to minimize taxes and probate fees upon death.

Acting as the executor to carry out the instructions in a will.

Identifying assets that could be appropriately transferred outside a will, such as joint assets with
the right of survivor ship and insurance proceeds.

Calculating how much liquidity an estate will need to meet the estate’s liabilities and bequests,
and to pay taxes.

2 of 10 *
You are having a discussion with your client regarding their estate
planning. Which of the following actions an individual takes while alive
will least likely have a direct impact on the smooth transition of their
estate?
Creation of a will.

Appointment of a general power of attorney.

Establishing charitable giving arrangements.

Structuring of asset ownership.

3 of 10 *
The gross value of Helen's estate was €1,000,000 and she left outstanding
debts of €200,000, prior to the calculation of any income taxes owing.
Probate fees in Helen's territory are 0.5% per €1,000 on the first €100,000
and 1.5 per €1,000 over €100,000. The probate fees on Helen's estate are
most likely closest to:
€ 14,000

€ 13,500
€ 17,000

€ 11,000

4 of 10 *
Your Client, A, has approached you and wishes to create a trust during his
lifetime, for the benefit of his wife, B and son C. He has decided that B and
C will share the income equally. He has also decided that he wants such
trust to survive him and therefore does not have any intention of dissolving
the trust. Which trust structure would be most suitable to achieve A’s
wishes?
Irrevocable Discretionary Trust

Irrevocable Non-Discretionary Trust

Revocable Non-Discretionary Trust

Revocable Discretionary Trust

5 of 10 *
A, during his lifetime, wishes to create a trust for the sole benefit of his
children, whereby he wishes to expressly reserve the right of re-assumption
of the trust property. What is this type of Trust called?
Revocable Trust

Public Trust

Testamentary Trust

Irrevocable Trust

6 of 10 *
Which of the following statements describing the attributes of trusts is
most likely correct?
The role of trustee is a fiduciary relationship between the trust and beneficiaries. Assets in a
revocable trust at the grantor's death do not pass through probate.

A trust has only 2 parties: the grantor and the beneficiary. Assets in a revocable trust at the
grantor's death do not pass through probate.

A testamentary trust is created at the grantor's death. Assets in a revocable trust at the grantor's
death do pass through probate.
Asset management is a valid reason for creating a trust. Assets in a revocable trust at the
grantor's death do pass through probate.

7 of 10 *
A person who creates a trust of property owned by him is known as the
____ of the trust.
beneficiary

executor

settlor

trustee

8 of 10 *
Every person has a unique situation. This is as true of estate planning as it
is more generally of financial planning. This means you cannot simply
follow a set pattern of steps that is the same with every client. However,
we can identify steps that should be part of most estate plans. Document
wishes is a step that involves more than creating a wish list. Which of the
following estate planning documents would allow an attorney-in-fact to
arrange for in-home nursing care, and hire other necessary health care
personnel as required?
Springing power of attorney

Living will.

Durable power of attorney.

Revocable living trust.

9 of 10 *
A has created an irrevocable trust in which he is the ‘protector’. A has
reserved the right, as protector, to remove any trustees at his will, and
appoint new trustees in their place. A is desirous of appointing himself as a
trustee. Can he do this?
Yes, A can do this but will require the consent of the beneficiaries.

No. A cannot do this as A is the settlor of the trust and a settlor cannot be a trustee.
Yes. A can do this if he has expressly reserved the right to do so under the trust deed.

No. A cannot do this even if he has reserved the right under the trust deed, as A cannot assume
the role of a protector and trustee at the same time.

10 of 10 *
In an irrevocable trust, ownership of assets transferred by the settlor vests
with the Trust and after such transfer is effected, they are no longer
considered personal assets of the settlor. What is the advantage of such a
structure?
HUF Property is secured

Total income tax exemption for settlor, beneficiaries and the trust

Assets may be ring-fenced from creditors

Beneficiaries are entitled to freely dispose of assets of the trust

8 out of 10 is correct

Insurance

1 of 10 *
Which one of the following sections of the insurance contract contains
complete description of properties covered, the time period of cover, the
exclusions and deductibles?
Operative Clause

Policy Schedule

Preamble

Provisio

2 of 10 *
Saurabh has a 25-year endowment plan, the premium being Rs.12,750 for
a sum assured of Rs. 10 lakh. As on date, he has paid 20 annual premiums
and has Rs. 8,00,000 towards declared bonuses on his policy. What loan
amount can Saurabh avail on his endowment policy if the insurer agrees to
pay 70% of the surrender value? Assume surrender value factor to be 80%
of the paid up value.
Rs. 4,65,920

Rs. 11,20,000

Rs. 8,96,000 {[(20/25*10,00,000)+8,00,000]*80%]70%}

Rs. 4,48,000

3 of 10 *
Subhash and Sujata have two daughters, Supriya and Sunidhi, age 6 and 4
years, respectively. While Subhash works in a bank, Sujata is a home
maker and will prefer to remain so until both children attain 18 years of
age. Subhash wants to buy a life cover which would take care of the living
and school expenses of both children till their age of 18. At present,
Subhash spends annually a sum of Rs. 90,000 on Supriya and Rs. 82,000
on Sunidhi for meeting these needs. How much life cover should Subhash
purchase to fund this requirement? Assume inflation of expenses to be 5%
per year and Subhash’s investments to yield a return of 7% per year during
the entire period.
Rs. 19,95,875

Rs. 19,83,383

Rs. 19,94,042

Rs. 20,06,654

4 of 10 *
David and Adam’s financial services company has been in operation for
just over a year. David handles most of the numbers and behind-the-scenes
work, while Adam maintains client relationships and focuses on sales. The
company is planning to buy key person life insurance on the lives of both
the partners. Which of the following is the correct statement regarding the
key person life insurance?
The primary beneficiary in case of key person insurance is the business firm.
The company cannot use the proceeds of key person insurance to hire temporary replacement.

Under the key person insurance, the key individual himself can apply and pay for his policy.

The policy shall make payment to the spouse of the key person in case of demise of the key
person.

5 of 10 *
The benefits of a group insurance scheme apply uniformly to all the
individuals. WhichS one of the following statements correctly describe a
feature of a group insurance scheme offered by the employer?
A group term plan provides financial security to the dependent families.

The premium cost for an individual is risk-based.

Group insurance policies have a fixed term.

Under Employees Deposit Linked Insurance (EDLI) scheme, the insurance benefit cannot be
availed by the legal heirs of the employee.

6 of 10 *
Arun, aged 35, is analysing a 20-year endowment policy with a premium
of Rs. 15,200 and a sum assured of Rs. 3.50 lakh. For this policy the
insurer has historically declared reversionary bonuses and terminal bonus
of Rs. 30 and Rs. 90 per thousand sum assured, respectively. Meanwhile, a
term plan with the same sum assured and time period is available for a
premium of Rs. 3,450. Assuming he survives the 20-year period, what
annual rate of return should be generated by Arun on the differential
component of the premium, to match the terminal value under the
endowment policy?
8.15% p.a.

5.98% p.a.

0.26% p.a.

8.86% p.a

7 of 10 *
Nidhi is fond of investing in high value fine arts and other collectibles. She
is eager to insure her high value collection. Which of the following is the
most important factor to be addressed by Nidhi for purchasing the personal
property coverage?
Current value of each item established by professional appraiser

Purchase price of each of the item validated by bill copy

Year of purchase of each of the item validated by bill copy

Insurance cover of the storage place

8 of 10 *
Which one of the following changes in actuarial assumption will not
increase the plan cost of Group Gratuity scheme for an employer?
Increasing interest rates

Increasing life expectancy

Higher growth rate of salary

Higher employee attrition

9 of 10 *
Jessica is determining whether to work for an insurer as an advisor. She
would also like to be sure of the company’s persistency relative to the
industry. Which of the following correctly reflects the feature of
persistency of the insurer?
A high persistency might indicate that the insurer is experiencing financial difficulties and
policyholders are leaving to protect their policy values.

A high persistency might indicate better results relative to illustrated values or low premiums.

A high persistency is a positive reflection on the performance of the insurer.

A high persistency might indicate a good after-sales service by the sales force.

10 of 10 *
Michael’s gross earnings were US$ 4000 per month prior to his disability
caused by an accident. He re-joins work soon and although he would be
working full time his gross earnings are reduced to US$ 3000 per month.
Michael has a residual disability income policy which has US$ 2500
benefit amount, a 25% residual disability provision, where reduction in
income should be greater than 20% of gross earnings. What will be
Michael’s gross monthly income, including the monthly pay outs from his
residual disability policy?
US$ 4000

US$ 3750

US$ 3625 (2500*25% = 625, 3000+625=3625

US$ 4625