Online free CFP® exam sample questions for Estate Planning

CFP exam estate planning subject

Having a strong conceptual knowledge base is undoubtedly important for the CFP® exam. Many students possess commendable theoretical knowledge and have invested considerable time in studying the material. However, when it comes to the actual CFP® exam, they often find themselves falling short of their expectations. The reason? The insufficient practice of questions.

While having a strong theoretical foundation is essential, it is equally crucial to apply that understanding in practical scenarios, which is where practice questions play a crucial role. Let’s look at these CERTIFIED FINANCIAL PLANNER™ exam MCQs from “estate planning” to aid you to convert your academic knowledge into practical application.

Q 1. Wade is insured of a life insurance policy worth $2 million. His wife, Tracey, is named as the policy’s owner, and his 20-year-old daughter, Rose, is named as the beneficiary. Which of the following will happen if Wade dies?

A. Tracey will make an indirect gift of $2 million from Wade’s policy to Rose

B. Rose will receive the insurance death benefits, and no gift will be made

C. Tracey will receive the insurance death benefits, and no gift will be made

D. Wade will make an indirect gift of $2 million from his policy to Rose

Click here for answer and detailed explanation

Q 2. Leo and Lisa intend to buy a house together. Lisa will contribute 20% and Leo will contribute 80% of the buying price. They each want their respective ownership portions of 80 percent and 20 percent reflected in the property title, as well as the option to bequeath their interests to whoever they desire in their wills. Which of the following forms of property ownership will meet Leo and Lisa’s needs?

A. Joint tenancy with right of survivorship (JTWROS)

B. Community property

C. Tenancy in common

D. Tenancy by the entirety

Click here for answer and detailed explanation

Q 3. It is common for a payment of debts clause to include all of the following except:

A. When the testator dies, all obligations should be cancelled

B. The majority of loans should not be repaid any sooner than they are due

C. To recover debts, creditors must follow claims processes

D. Debts related to funeral expenses and recent medical bills should be paid as soon as possible

Click here for answer and detailed explanation

Q 4. When what rule is triggered, the death proceeds of a life insurance policy are included in the decedent’s gross estate?

A. The 2-year rule

B. The 3-year rule

C. The 4-year rule

D. The 5-year rule

Click here for answer and detailed explanation

Q 5. Ramon spent $9,000 on a painting. Years later, when the artwork had decreased in value to $5,000, he gave it as a gift to his brother, Miles. Miles sold the artwork for $3,000 seven months later. Assuming Miles did not pay any gift taxes when he acquired the picture, what was Miles’s net gain or loss on the sale?

A. $2,000 loss

B. $3,000 loss

C. $6,000 loss

D. No gain or loss will be recognized

Click here for answer and detailed explanation

Q 6. The insurance company found Alice (the insured) was 58 years old after she died, despite the fact that she claimed to be 56 on her application. Which of the following options is available to the insurer?

A. The insurer can deny paying the death benefit to Alice

B. The insurer can cancel the policy if Alice died during the contestable period

C. The insurer can decrease the face amount of the policy

D. The insurer can force Alice to pay a higher premium

Click here for answer and detailed explanation

Q 7. The deceased spouse gives the surviving spouse a general power of appointment to distribute the decedent’s property as the surviving spouse sees fit under which of the following trusts? Since the surviving spouse holds a general power of appointment, he or she may use trust assets to benefit him or herself directly.

A. Marital trust

B. Credit shelter trust

C. QTIP trust

D. Estate trust

Click here for answer and detailed explanation

Q 8. Shane and Alice Clark have spent their whole marriage in a community property state. They have a home that is solely registered in Alice’s name. If she dies, what will happen to the house?

A. The house will pass automatically to Shane

B. The house will pass automatically to Alice’s closest family member

C. Alice’s half will pass by will. Shane already owns half under community property laws

D. The house will pass through Alice’s will, and the entire house will go to Shane

Click here for answer and detailed explanation

Q 9. Stefan, a wealthy widower with four healthy children, is 72 years old. Stefan has a sickness that will most likely prevent him from living out his life expectancy. Stefan’s current gross estate is predicted to be $4,000,000, with $2,000,000 in rental real estate interests. Stefan’s goals include reducing estate and gift taxes and ensuring that he has enough cash flow for the rest of his life to cover the expense of potentially expensive health care. Which of the following techniques would be most appropriate for Stefan?

A. A self-canceling installment note (SCIN)

B. A private annuity contract with his children

C. Creation of a family limited partnership followed by federal annual exclusion gifts

D. A grantor retained income trust (GRIT)

Click here for answer and detailed explanation

Q 10. Which of the following statements best describes a decedent’s property interests that pass automatically upon death? (I) If the property passes by operation of law, the property avoids probate. (II) If the property passes by operation of law, it will not be included in the decedent’s gross estate. (III) Legally acquired property is not eligible for the marriage deduction. (IV) The titling on the document decides who will receive the property when it passes by operation of law.

A. I only

B. II, III and IV only

C. I and IV only

D. I, III and IV Only

Click here for answer and detailed explanation

While having a solid understanding of financial planning concepts will help a lot, it is the practical application of that knowledge through practice questions that can make a significant difference in exam performance. Overcome this challenge by practicing estate planning MCQs to bridge the gap between theory and assessment results. Without wasting time, attempt as many questions as possible from the CFP® Exam Prep By Achieve App to enhance your overall exam readiness and significantly increase your chances of achieving success in the CERTIFIED FINANCIAL PLANNER™ exam.