Series 65 Unit 18

Which of the following would be used to provide end-of-life instructions once a person becomes incapacitated?

A living will

The type of trust created by a will that becomes operative at death is?

A testamentary trust

When does a customer have to receive the OCC Options Disclosure Document?

At or prior to the time the account is approved for options trading

This trust may make distributions from the corpus (body) of the trust & they can retain income.

Complex Trust

Under Section 4942 of the Internal Revenue Code, a private foundation must pay out each year what amount?

Equal to 5% of its net investment assets in "qualifying distributions".

True or False. Receipt of a completed options agreement from the clients must be done prior to customers entering their first option trade.

False. Customers do not have to complete (sign) the options agreement prior to entering an order; under current rules, the agreement must be signed and returned by the customer within 15 days of account approval.

True or False. An UTMA account can be opened with a TOD designation.

False. Minors cannot specify a beneficiary.

Which two business entities have full liability?

General partnership and Sole proprietorship.

A grantor retained annuity trust is a planning tool designed to pass assets to beneficiaries (usually children) in a way to minimize

Gift and/or estate taxes. Because incidents of ownership remain with the grantor, all income is taxed to the grantor. Which means it will not be used to reduce income taxes.

A grantor retained annuity trust (GRAT)would not be used to reduce what?

Income taxes. A GRAT is an estate planning tool designed to pass assets to beneficiaries (usually children) in a way to minimize gift and/or estate taxes. Because incidents of ownership remain with the grantor, all income is taxed to the grantor.

The proceeds of this policy are free of income tax

Life Insurance Policy

In general, people with estates where there is a potentially large estate tax liability find that the most efficient way to pay those taxes is through a what?

Life insurance policy.

A feature of which of the following business entities is limited liability for owners, as well as flow-through of income?

Limited partnership.

Owners of an LLC are called

Members

A corporation organized as a C corporation is taxed on what levels?

On the corporate level and then again to the shareholder when income is distributed in the form of dividends

Which Business Structure avoids double taxataion?

S-Corp. Because an S corporation is taxed like a partnership, all earnings (or losses) flow directly through to the shareholders. This avoids the double taxation inherent in receiving a share of the profits (through dividends) from a C corporation.

In order for an investment adviser to enter into an advisory contract with an investment company, the adviser must be?

SEC registered (federal covered). Federal covered investment advisers are never registered in any states.

This trust must distribute their distributable net income each year

Simple Trust

Owners of S corporations are also

Stockholders

When a client dies without a will, the person appointed to handle affairs will be called what?

That person may be called the administrator of the estate or the trustee in intestacy.

A sole proprietor might consider which business structure when considering selling the business?

The corporate form. This business structure would be the easiest for ultimate transfer of ownership

This trust allows for the transfer of ownership of a bank account to a beneficiary or beneficiaries after the owner's death. It is the predecessor of today's POD (pay on death) and TOD (transfer on death) accounts.

Totten Trust

In the banking industry, the term POD refers to an account similar to the TOD designation used by broker-dealers. An old, but sometimes still used term to describe this kind of account, is?

Totten trust

In the philanthropic arena, the ESG business factors that should be considered when analyzing a firm are a company's what?

environmental, social, and governance risk exposures.