FPQP® Module 9 Estate Planning Basics Exam Questions
and Graded Financial Solutions latest edition 2025/2026
Which of the following statements regarding the federal gift tax annual exclusion is
CORRECT?
A) The annual exclusion is unlimited in amount.
B) The annual exclusion is generally only allowed for gifts of a present interest.
C) The annual exclusion can only be applied to a limited number of donees.
D) The annual exclusion is never adjusted for inflation. - correct answer B) The annual
exclusion is generally only allowed for gifts of a present interest.
Explanation
Current interest gifts, which satisfy for the annual exclusion, are those that a donee can
use, possess, or enjoy immediately, without restriction. The annual exclusion is
increased from time to time to reflect inflation.
Which of these is a medical proxy that authorizes another to make health care decisions
on an individual's behalf?
A) Revocable living trust
B) Living will
C) A special needs trust
D) Durable power of attorney for health care - correct answer D) Durable power of
attorney for health care
Explanation
A durable power of attorney for health care is the medical proxy for another to make
health care decisions.
Which of the following statements regarding estate planning is CORRECT?
A) Estate planning is primarily about avoiding estate taxes.
B) Estate planning is not relevant for young families with children.
C) Estate planning is not relevant for the owner of a closely held business.
, D) Titling of assets is an important part of the estate planning process. - correct answer
D) Titling of assets is an important part of the estate planning process.
Explanation
Titling of assets is an important part of estate planning because it dictates who receives
the deceased's share or determines that the deceased's share will be distributed, as
decided by the probate process.
Which of these statements concerning the $19,000 (2025) annual gift tax exclusion
amount is CORRECT?
A) One may gift up to $19,000 to each of an unlimited number of individuals and still be
able to claim an exclusion from gift taxes.
B) Only one $19,000 exclusion is allowed for a married couple if they file jointly.
C) The $19,000 annual exclusion amount is not subject to gift taxes but does reduce the
$13.699 million (2025) exemption amount by $19,000.
D) The annual exclusion is available only for transfers to donees related to the donor. -
correct answer A) One may gift up to $19,000 to each of an unlimited number of
individuals and still be able to claim an exclusion from gift taxes.
Explanation
The $19,000 annual exclusion is per donee, and there is no limit to the number of
individuals that one may give gifts to using the annual exclusion. The annual exclusion
does not reduce the exemption amount.
Which of these is an advantage of trusts when planning for incapacity?
A) Trusts are usually simple to create and inexpensive to administer.
B) Trusts and the authority of a trustee are routinely accepted by financial institutions.
C) Trusts put an incapacitated person's financial affairs into public view.
D) Trusts are under the continuing supervision of a court to prevent misappropriation of
property. - correct answer B) Trusts and the authority of a trustee are routinely
accepted by financial institutions.
Explanation
Trust law is well established in both the statutory and case law of every state. This
certainty makes financial institutions more willing to deal with a trustee than with the
agent under a durable power of attorney. However, establishing a trust almost always
and Graded Financial Solutions latest edition 2025/2026
Which of the following statements regarding the federal gift tax annual exclusion is
CORRECT?
A) The annual exclusion is unlimited in amount.
B) The annual exclusion is generally only allowed for gifts of a present interest.
C) The annual exclusion can only be applied to a limited number of donees.
D) The annual exclusion is never adjusted for inflation. - correct answer B) The annual
exclusion is generally only allowed for gifts of a present interest.
Explanation
Current interest gifts, which satisfy for the annual exclusion, are those that a donee can
use, possess, or enjoy immediately, without restriction. The annual exclusion is
increased from time to time to reflect inflation.
Which of these is a medical proxy that authorizes another to make health care decisions
on an individual's behalf?
A) Revocable living trust
B) Living will
C) A special needs trust
D) Durable power of attorney for health care - correct answer D) Durable power of
attorney for health care
Explanation
A durable power of attorney for health care is the medical proxy for another to make
health care decisions.
Which of the following statements regarding estate planning is CORRECT?
A) Estate planning is primarily about avoiding estate taxes.
B) Estate planning is not relevant for young families with children.
C) Estate planning is not relevant for the owner of a closely held business.
, D) Titling of assets is an important part of the estate planning process. - correct answer
D) Titling of assets is an important part of the estate planning process.
Explanation
Titling of assets is an important part of estate planning because it dictates who receives
the deceased's share or determines that the deceased's share will be distributed, as
decided by the probate process.
Which of these statements concerning the $19,000 (2025) annual gift tax exclusion
amount is CORRECT?
A) One may gift up to $19,000 to each of an unlimited number of individuals and still be
able to claim an exclusion from gift taxes.
B) Only one $19,000 exclusion is allowed for a married couple if they file jointly.
C) The $19,000 annual exclusion amount is not subject to gift taxes but does reduce the
$13.699 million (2025) exemption amount by $19,000.
D) The annual exclusion is available only for transfers to donees related to the donor. -
correct answer A) One may gift up to $19,000 to each of an unlimited number of
individuals and still be able to claim an exclusion from gift taxes.
Explanation
The $19,000 annual exclusion is per donee, and there is no limit to the number of
individuals that one may give gifts to using the annual exclusion. The annual exclusion
does not reduce the exemption amount.
Which of these is an advantage of trusts when planning for incapacity?
A) Trusts are usually simple to create and inexpensive to administer.
B) Trusts and the authority of a trustee are routinely accepted by financial institutions.
C) Trusts put an incapacitated person's financial affairs into public view.
D) Trusts are under the continuing supervision of a court to prevent misappropriation of
property. - correct answer B) Trusts and the authority of a trustee are routinely
accepted by financial institutions.
Explanation
Trust law is well established in both the statutory and case law of every state. This
certainty makes financial institutions more willing to deal with a trustee than with the
agent under a durable power of attorney. However, establishing a trust almost always
