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CHFC > Test Questions > Flashcards

Test Questions Flashcards

1
Q

Key employee life insurance

A

amount of coverage should evaluate value to firm

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2
Q

Liquidation of deceased’s interest in buy – sell

A

distributive income as ordinary income to estate

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3
Q

Recertification of qualification for employment

A

NOT letter of intent

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4
Q

Wait list

A

accelerate need for special needs to move from home

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5
Q

ABLE

A

= tax exempt, contributions cannot exceed $15k by all per year

o * disability before age 26 but may be older than 26
o *do not need to currently receive SSI/ Medicaid

o Subject to individual state & limit for 529 accounts
o Only allow “qualified disability expenses” - personal support, financial management & administrative services, housing, education
o Funds under $100K exempt from SSI

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6
Q

ILIT

A

avoid Crummery withdrawal powers

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7
Q

Health care POA

A

refuse to apply artificial nutrition/ hydration for terminal illness

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8
Q

AGI

A

= medical expenses 7.5% of AGI income
o Impairment related not to limit (only for handicapped)
o Charitable contributions deductible
o Roth IRA more favorable AGI limit than IRA

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9
Q

Blended family

A

NOT different generations

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10
Q

Property settlement of divorce

A

nontaxable event

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11
Q

Divorce Social security

A

can begin at 62 from ex-spouse’s benefit as long as ex-spouse is of retirement age

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12
Q

Community property

A

= retains status even if taken to noncommunity law state

  • Remain community property & if quasi, automatically becomes it
  • If award, entire amount is community property
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13
Q

Divorce child support

A

NOT tax deductible

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14
Q

Divorce division of pension

A

wait-and-see valuation NOT needed

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15
Q

Business ILIT

A

proceeds reduce liquidity burden without adding estate tax & income to surviving spouse, inheritance to heirs

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16
Q

LLC

A

= designated beneficiary
o Policyowner
o Premium payor
o Policy should approximate the amount of sale price

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17
Q

SNT

A

– income taxed to beneficiary
o Transfer of assets in is an incomplete gift
o Make distributions to child during lifetime
o Receives excess assets to permit bene to qualify for Medicaid
o Only created & funded if under 65
o Assets after death but first reimburse state for Medicaid
o Distribution for family caregiver not treated as income for SSI/ Medicaid

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18
Q

SSDI

A

Can be appealed if initially rejected

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19
Q

AMT for business

A

o Accumulated-earnings tax if profits above $250K

o No corporate AMT

20
Q

Disability to Social Security

A

unable to do gainful activity by mental/ physical impairment (not result in death)

21
Q

Supplemental Security Income (SSI)

A

business interest not included

22
Q

System 1

A

animal responses (automatic)

23
Q

GSTT

A

annual exclusion available for direct skips to grandchildren

24
Q

Provisional Income

A

AGI + tax exempt interest + ½ social

25
Q

Inflation Risk

A

period certain immediate annuity

*made worse by longevity risk

26
Q

Longevity return

A

does not make sequence of return risk worse

27
Q

systematic withdrawal

A

converting retirement assets into income = fixed distribution adjusted for inflation
o Bucket approach
o Age-banded approach
o Essential vs. discretionary (flooring)

28
Q

marital deduction

A

must be US citizen at time of gift

29
Q

Deduction from decedent’s gross estate

A

expenses from collecting assets & probate distribution costs to bene

30
Q

Religious convictions filled out

A

medical POA & signing POLST

31
Q

Traditional finance

Behavioral finance

A

= undermines human nature in relation to market

= emphasizes human nature in relation to market

32
Q

Imagination capital

A

to save for a goal (negative emotion if don’t reach goal)

33
Q

Robert Schiller

A

= volatility puzzle (disputed efficient market)

*prices move more than should on earnings & interest rates

34
Q

Fama & French

A

= value ETFs can match performance of active managers (due to market inefficiencies)
* No evidence that stock managers can persistently beat markets

35
Q

Decumulation phase risk tolerance

A

= retirement assets depleted prior to end of life (level of concern)

36
Q

Biases

A

violations of neoclassical economic theory identified through descriptive analysis

37
Q

QDRO

A

= court order provides special instructions to plan admin about payment to nonparticipant spouse (alternate payee) for pension  splitting a pension in a divorce

38
Q

“unified” system of estate & gift tax

A

= estate & gift share same tax schedule, exclusion amounts, credit amount (regardless is transfer life/ death

39
Q

QTIP

A

= exception to gift tax terminable interest rule
o Qualifies for unlimited marital deduction to transferor spouse/ estate
o Transferee spouse receive only qualifying income interest for life
o Remainder interest passes in accordance w/ transferor (donor) spouse’s direction

40
Q

2503(c)

A

NO Crummery provision

41
Q

Above-the-line deductions

A

tax credit claimed as deduction whether or not itemizes deductions (business or income) *reduces AGI

42
Q

Retirement income planning

A

= not synonym for retirement planning

* Client does not need to know software to calc. expected aggregate future retirement expenses

43
Q

Projected retirement income shortfall

A

reduce current expenses to make more income avail. for contribution to tax-deferred account

44
Q

Prospect Theory

A

o Reference dependence
o Loss aversion
o Nonlinear probability weighting

45
Q

Crummery Power

A

= create present interest gift to qualify for annual exclusion for transfers in trust
o Allows trust bene the right to make withdrawals
o Right to withdrawal unexercised = lapsed

CHFC (8 decks)

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