CTFA DOMAIN REVIEW
QUESTIONS AND
CORRECT ANSWERS
GRADED A+ 2025-2026
Under what circumstances will a trustee be deemed to have been granted a
discretionary power? - ANS-If the terms of the trust or state law grant the power
If all beneficiaries consent to the exercise of the power
If a court order grants the power
Which parties are necessary to create a trust? - ANS-The settlor, the trustee, and the
beneficiaries
Which situation is least likely to result in a court action due to a trustee's exercise of
fiduciary powers?
When a trustee has acted in bad faith
When a trustee makes an investment that generates a loss
When a trustee is also a beneficiary
When a trustee has refused to make a distribution to a beneficiary - ANS-When a
trustee makes an investment that generates a loss
True or False. Generally, the estate tax return is due on April 15th following the year of
death. - ANS-False. Estate Tax returns are due nine months after the date of death. A
six-month extension is available if requested prior to the due date and with estimated
tax paid before the due date.
Jane is a client of Jill. Jane recently sold her business and now wants to focus on the
next phase of her life - giving back to her community. This will involve both Jane's time
, and money. Jane knows exactly how she is going to spend her time volunteering;
however, she is not sure how best to structure and optimize her financial giving. From
the options below, which one is not a viable charitable strategy for Jane?
Donor Advised Fund
Charitable Lead Trust
Grantor Retained Annuity Trust
Giving appreciated securities - ANS-Grantor Retained Annuity Trust; A Grantor
Retained Annuity Trust is not a charitable strategy; all the other options involve a
charitable purpose.
John is an employee working for a publicly-traded company. His yearly salary and
annual bonus reported to him on his W-2 at the end of the year is what type of
income? - ANS-Earned income
Social Security is a government sponsored retirement benefit program designed to
replace some income during retirement. These individuals are eligible for Social
Security except:
Survivors
Retired workers
Siblings
Spouses - ANS-Siblings are not an eligible designation for Social Security benefits per
se; the sibling would have to qualify for Social Security based upon their own work
history and what they paid in terms of taxes on their income during that work history.
True or false. Tenancy-by the entirety is a form of co-ownership recognized by many
states as a variation of joint ownership, which applies only to married couples. This
tenancy generally has the same legal characteristics of a joint ownership with a few
additional features. Normally, protection against the claims of creditors that applies to
joint tenancies at the death of a joint tenant is also available against the lifetime
creditors of the tenant. - ANS-True.
What type of trust is described: the trust must distribute all its income currently.
Generally, it cannot accumulate income, distribute out of corpus, or pay money for
charitable purposes. - ANS-This description is of a simple trust.
True or false.
QUESTIONS AND
CORRECT ANSWERS
GRADED A+ 2025-2026
Under what circumstances will a trustee be deemed to have been granted a
discretionary power? - ANS-If the terms of the trust or state law grant the power
If all beneficiaries consent to the exercise of the power
If a court order grants the power
Which parties are necessary to create a trust? - ANS-The settlor, the trustee, and the
beneficiaries
Which situation is least likely to result in a court action due to a trustee's exercise of
fiduciary powers?
When a trustee has acted in bad faith
When a trustee makes an investment that generates a loss
When a trustee is also a beneficiary
When a trustee has refused to make a distribution to a beneficiary - ANS-When a
trustee makes an investment that generates a loss
True or False. Generally, the estate tax return is due on April 15th following the year of
death. - ANS-False. Estate Tax returns are due nine months after the date of death. A
six-month extension is available if requested prior to the due date and with estimated
tax paid before the due date.
Jane is a client of Jill. Jane recently sold her business and now wants to focus on the
next phase of her life - giving back to her community. This will involve both Jane's time
, and money. Jane knows exactly how she is going to spend her time volunteering;
however, she is not sure how best to structure and optimize her financial giving. From
the options below, which one is not a viable charitable strategy for Jane?
Donor Advised Fund
Charitable Lead Trust
Grantor Retained Annuity Trust
Giving appreciated securities - ANS-Grantor Retained Annuity Trust; A Grantor
Retained Annuity Trust is not a charitable strategy; all the other options involve a
charitable purpose.
John is an employee working for a publicly-traded company. His yearly salary and
annual bonus reported to him on his W-2 at the end of the year is what type of
income? - ANS-Earned income
Social Security is a government sponsored retirement benefit program designed to
replace some income during retirement. These individuals are eligible for Social
Security except:
Survivors
Retired workers
Siblings
Spouses - ANS-Siblings are not an eligible designation for Social Security benefits per
se; the sibling would have to qualify for Social Security based upon their own work
history and what they paid in terms of taxes on their income during that work history.
True or false. Tenancy-by the entirety is a form of co-ownership recognized by many
states as a variation of joint ownership, which applies only to married couples. This
tenancy generally has the same legal characteristics of a joint ownership with a few
additional features. Normally, protection against the claims of creditors that applies to
joint tenancies at the death of a joint tenant is also available against the lifetime
creditors of the tenant. - ANS-True.
What type of trust is described: the trust must distribute all its income currently.
Generally, it cannot accumulate income, distribute out of corpus, or pay money for
charitable purposes. - ANS-This description is of a simple trust.
True or false.
