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CHFC Round 3 > PASS > Flashcards

PASS Flashcards

1
Q

prospect then…

A

scope of relationship

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2
Q

TCJA

A

repealed ONLY corporate AMT
(NOT accumulated earnings tax)
C Corp taxed at flat 21%

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3
Q

TCJA key employee compensation deducti9on

A

$1MM

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4
Q

letter of intent

A

NOT legally binding
special needs living situation and future goals
(no parents estate planning docs)

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5
Q

durable POA

A

drafted by estate planner

* complements/ replaces revocable

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6
Q

Bhettr case

A
  1. Bhettr increase life insurance on his life w/ Nitan and Summ as bene
  2. remove Gudd as bene from life insurance of Bhettr
  3. ILIT own LI so NOT in Bhettr estate
  4. Bhettr LI transferred to trust
  5. family limited partnership w/ limited interest to Nitan and Summ
  6. buy sell w/ Gudd
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7
Q

investment w/ research team for stocks

A

weak form

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8
Q

NOT eliminated through diversificati0on

A

market risk

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9
Q

sandwich generation

A

struggle to support 3 generations (parent, self, children) w/ pool resource

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10
Q

wear 2 hats

A

advisor and salesperson

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11
Q

flat free

A

calc on client net worth

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12
Q

mutual fund theorm

A

risk free investment and market portfolio

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13
Q

risk premium

A

induce investor to buy uncertain payout

high risk = high premium

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14
Q

Fama 3-factor model

A

price/book/size (value/ small outperform growth)

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15
Q

adoption credit ($13,840 per child)

A

full amount available for special needs REGARDLESS expenses
phased out for upper income
(special needs adoption less expensive)
* 5 year carryover

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16
Q

advisor shows/ recommend

A

framing

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17
Q

digital assets at death

A

fed and state developing laws how to designate prior

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18
Q

private equity premium puzzle

A

undiversified due to illusion of control (private business holds own stock)

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19
Q

prices increase more than fundamentals

A

volatility puzzle

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20
Q

return chasing

A

invest more in recent high performing and withdraw underperforming

dollar weighted - compare investor to mutual fund

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21
Q

Baker, Bradley, Wurgler 1968-2008

A

high beta = LOWER return
LOW beta more efficient
*against CAPM

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22
Q

pet

A

used to be property at death —> pet trust

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23
Q

house money effect

A

gains = house $ and will lose unearned easily (don’t know when to walk away)

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24
Q

status quo

A

= inherited (stay with because familiar)

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25
Q

hedonic adaption

A

relative compensation limited around us

extreme –> go back to normal (divorce, job loss, death)

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26
Q

inflation hedge

A
  1. TIP
  2. real estate
  3. social security
    (not single straight life annuity)
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27
Q

QDRO remarry

A

if NOT worded property –> automatically paid to new spouse rather than surviving spouse

  • CANNOT change bene
  • 10% penalty if not 59 1/2
  • even frozen/ overlooked plans
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28
Q

1041 exchange

A 
seller = not taxed
buyer = no basis step up (basis transfer)
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29
Q

Medicare/ Medicaid (poor)

A

does NOT pay for LTC

for special needs/ Alzheimers

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30
Q

ROTH IRA conversion

A

convert by Dec. 31st of year

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31
Q

testamentary trust

A

life insurance for LIQUIDITY w/ no incident of ownership (children own or ILIT)
* pay tax

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32
Q

large estate

A

= life insurance for LIQUIDITY w/ no incident of ownership (children own or ILIT)
* pay tax

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33
Q

life insurance estate enhancement

A

young/ small estate/ special needs

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34
Q

dying intestate

A

dying without a will

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35
Q

excluded gifts

A

NOT included in estate tax calc

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36
Q

living will

A

= medical directive

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37
Q

nonqualified annuity taxation

A 
pre-annuitization = LIFO
annuitization = ratio
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38
Q

DURABLE POA

A

ceases at death (continues when client incapacitated)

general - stops when incapacitated

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39
Q

installment note taxation

A

seller: capital gain (15%)
basis (tax-free)
interest (ordinary income)

buyer: interest is deductible

40
Q

completed gift

A

=beyond recall and no control

41
Q

changing will

A

disabled CAN change will

incapacitated CANNOT

42
Q

springing POA

A

*recognized by ALL states

= until regain competency/ revokes

43
Q

medical POA

A

must be accompanied by HIPAA

44
Q

social security disability

A

not in estate planning

  • end when recover/ die
  • no LTC
45
Q

inclusionary/ exclusionary

A

fed estate tax = inclusionary = tax paid out of estate

gift tax = exclusionary = pay tax on gift and gift tax separately

46
Q

lose pass-through

A

if S CORP is over 100 employees

47
Q

life insurance

A

= INCLUDED in gross estate (EXCEPT ILIT)

48
Q

ABLE

A

contributions can be used for Medicaid at a later date

*ALL assets NOT for SSI/ Medicaid eligibility

49
Q

3rd party special needs trust

A

grantor CAN make his heirs bene

50
Q

IRD (Income In Respect Of A Decedent)

A

UNTAXED INCOME which decedent earned

tax deferred income going to bene (no step up basis)

51
Q

pour over will w/ testamentary trust

A

pour all assets into trust at death (get out of estate)

52
Q

spousal elective share

A

minimum amount of estate going to surviving spouse

53
Q

SLAT

A

= irrevocable trust where spouse can access income for HEMS

54
Q

reverse mortgage

A

62 and up

55
Q

incomplete transfer

A

double taxation (gift and asset of estate)

56
Q

transfer property w/ right to designate people to enjoy income/posses
(“will substitute”)

A

INCLUDED in gross estate

57
Q

custodial w/ donor custodian of minor bene

A

INCLUDED in gross estate

mom UTMA open at death w/ daughter minor

58
Q

GRAT

A

= annuity

grantor pays income tax on annuity stream

59
Q

QPRT (qualifying personal residence trust)

A
  • GRAT
  • trust w/ grantor residence and grantor can live in it
  • transfer to bene = gift
  • residence/ appreciation EXCLUDED from estate
  • income getting out of it = use of property
60
Q

bequth

A

leave when dead to bene (not gift)

61
Q

life insurance on DECENDENT

A

PROCEEDS are estate taxable (except in ILIT

62
Q

life insurance on ANOTHER

A

POLICY fair market value is estate taxable (not the proceeds)

63
Q

power of appointment

A

if favorable decedent = general power of appointment = INCLUDED in gross estate

64
Q

ascertainable standard

A

= protects from creditors

= HEMS (allows bee to be trustee without in estate)

65
Q

deductions

A 
funeral
admin
loss of casualty/ theft
debt
--
marital
charitable
66
Q

DSUE (portability election)

A

decedent estate must file estate tax return

*if remarry = forfeit

67
Q

gift of straw man

A

(intermediary) = taxable gift

68
Q

lapsed Crummery provision

A

= multiple benes
completed gift to other bene w/ retained interest = INCLUDED in estate

*need 5 AND 5 PROVISION = no taxable gift if greater or ,$5,000 or 5% of trust

69
Q

Form 706

A

*only if EXCEEDS exemption –> filed within 9 months of decedent death
(6 month extension)

70
Q

6166

A

14 year installment period
first 5 years = interest only
must own at least 20%
no more than 15 owners

71
Q

marital deduction

A

SURVIVING spouse must need GENERAL POA to qualify (EXCEPT QTIP)
= just transfer (deferring tax to survivor)

72
Q

credit shelter trust

AB, by-pass

A
  1. A trust (marital trust)

2. B trust (by-pass, credit shelter) = *annual exclusion and remaining goes to A

73
Q

completed gift with JTWROS

A

when other WITHDRAWALS

74
Q

UTMA and 2503(c)

A

DOES use annual exclusion

75
Q

GSTT

A

= grandchild or 37 1/2 years outside family

76
Q

A client believed their advisor who always guessed correctly for 5 years, and will again this year

A

hot hand fallacy

77
Q

Advisor suggest LTC insurance for client, but client does not want to make any changes because they don’t think they need LTC.

A

anchoring

78
Q

Recommend to take social security

A

Single male unhealthy and high paying job

79
Q

Penalty/ common mistake for filing a gift tax when NOT taxable?

A

NO penalty

80
Q

If a couple is 25 and save a certain amount monthly and want a certain amount in retirement. Then if instead start saving at 35, to get the same amount in retirement, you recommend:

A

Save more annually

not increase beta

81
Q

heir to business If family NOT prepared

A

= outside board of directors

82
Q

REDUCE accumulated earning tax

A

= incorporate business and pay family salary

moves $ from C

83
Q

administrative expenses

A

2.5% of estate

84
Q

split gift Form 709

A

filed YEAR AFTER gift made w/ consenting spouse signature

85
Q

lack of marketability

A

10-35%

86
Q

fractional interest

A

10-20%

87
Q

buy/sell entity tax treatment

A

entity purchase = increase basis

stock redemption = no change

88
Q

Medicaid/ SSI lookback

A

= 36-60 . months

89
Q

SSI/ Medicaid eligibility

A

try to spend down UGMA

90
Q

disability

A

mental/ physical that:

  1. can result from death
  2. last for at least 12 months
91
Q

qualify for social security before Medicaid

A

must qualify for social for 2 years before qualify for Medicaid

92
Q

SSI

SSDI

A

SSI = disability BEFORE 22 and no work ($750K monthly)

SSDI = disability anytime and have worked

93
Q

Miller Trust

A

holds EXCESS income (above 133%) of special needs so can still qualify for SSI

94
Q

2503(B)

A

distribute income AND past 21

95
Q

2503(C)

A

can accumulate, but distribute ALL at 21

*annual exclusion

CHFC Round 3 (3 decks)

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