Risk Management & Estate Planning Flashcards
7 cards from real RMA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Risk Management & Estate Planning flashcards as text
Under SECURE 2.0, what is the required beginning date for RMDs for individuals who turn 73 in 2023 or later?
Answer: April 1 of the year after turning 73
SECURE 2.0 raised the RMD starting age to 73 for those born between 1951 and 1959, with the first RMD due by April 1 of the year following the year they turn 73.
A retiree wants to reduce estate taxes and support a charity. Which technique combines a charitable gift with retained income for the donor's heirs, with the remainder passing to charity?
Answer: Charitable Lead Annuity Trust (CLAT)
A CLAT pays fixed annuity payments to a charity for a specified term, with the remaining trust assets passing estate-tax-efficiently to heirs at the end of the term.
Which risk describes the possibility that a retiree's purchasing power erodes because investment returns fail to keep pace with the rising cost of goods and services?
Answer: Purchasing power (inflation) risk
Purchasing power risk (inflation risk) is the danger that inflation outpaces portfolio returns, reducing the real value of assets and income over a long retirement.
An adviser recommends that a client increase their bond allocation upon retirement. Which risk does this change MOST directly increase for the client?
Answer: Inflation risk
A heavy bond allocation in retirement reduces growth potential, increasing the risk that fixed-income returns lag inflation and erode the retiree's purchasing power over a long horizon.
A 'pour-over will' is used in conjunction with a revocable living trust to:
Answer: Direct probate assets into the revocable living trust at death
A pour-over will acts as a safety net, directing any assets that were not transferred to the revocable living trust during life to 'pour over' into the trust at death through probate.
Which of the following BEST describes the difference between a revocable and an irrevocable trust for estate tax purposes?
Answer: A revocable trust does not remove assets from the taxable estate; an irrevocable trust generally does
Because the grantor retains control over a revocable trust, its assets remain in the taxable estate; an irrevocable trust generally transfers ownership and removes assets from the gross estate.
A client is evaluating hybrid long-term care insurance products. The MAIN advantage of a linked-benefit (life/LTC hybrid) policy over standalone LTC insurance is:
Answer: Unused LTC benefits pass as a death benefit, eliminating the 'use it or lose it' concern
Hybrid life/LTC policies address a primary objection to standalone LTC insurance by guaranteeing that if LTC benefits are not fully used, the remaining value pays a death benefit to heirs.