Unit 9 SIE

A customer desires to open a brokerage account and deposit checks from their business into the account. They are the only owner of the non-incorporated business. The best account to open is which of the following?

Sole Proprieter

Which type of trust is more commonly established during a grantor's lifetime?

Living Trust

Which statement is accurate about funding a decedent trust?

Assets are transferred to the trust after the grantor’s death.

Which of the following is among the items of information that must be entered on a new account form?

Names of all persons who will have access to the account

Which of the following accounts would allow the assets of a single father's account to go directly to his daughter while avoiding probate but not let her have access while he is alive?

Individual with transfer on death (TOD)

Under the Uniform Transfers to Minors Act (UTMA) a custodian has control over the account and can do each of the following except

sell short and write uncovered call options.

A married couple opens a new account with a broker-dealer as tenants in common. In explaining the details of the account to the couple, the registered representative would not indicate which of the following?

Certificates may be registered in the name of either party.

What is a primary benefit of establishing a living trust?

Avoiding probate for the assets within the trust.

What is a trust created and funded during the grantor's lifetime called?

Living Trust

A corporation would like to open a margin account. Which of the following is not needed?

A corporate charter that specifically allows margin borrowing

If the beneficiary of a custodian account dies, the securities in the account pass to

the minor's estate.

Which of the following must be opened as a cash account?

1. Custodial accounts

2. Individual retirement accounts

3. Joint accounts

4. Partnership accounts

1 & 2

One of your clients wants to set aside some money for her nephew, who just turned 30, but she has some reservations. She does not wish his numerous creditors to have access to the money until after she dies, but she wants him to have easy access to the money at that time. You recommend that she open

a TOD registration on an account in her name.

The benefits of designating a brokerage account as transfer on death (TOD) are that

1. the designation eliminates estate taxes.

2. the designation avoids probate.

3. the account holder no longer has to make investment decisions regarding the account.

4. the account holder may still make beneficiary changes for the account.

2 & 4

Which of the following is a benefit of 529 plans but not Coverdell Education Saving Accounts?

No income restrictions

Which type of trust is formed after the death of the grantor?

Decedent trust

Which of the following is among the items of information that must be entered on a new account form?

Names of all persons who will have access to the account

Which of the following must precede the first trade in an account?

Approval of the new account by a principal

What is a trust created and funded during the grantor's lifetime called?

Living trust

How does a living trust differ from a decedent trust in terms of flexibility?

A living trust can be modified; a decedent trust cannot.

In a living trust, who can modify the trust while the grantor is alive?

the grantor

The primary use for a revocable living trust is to

use as a substitute for a will.

Three brothers open a joint account instructing you that if they die, they want the cash and securities in the account to go to the remaining parties to the account. The account should be opened

with rights of survivorship.

A corporation would like to open a margin account. Which of the following is not needed?

A corporate charter that specifically allows margin borrowing

Which document is required for a corporation to open a brokerage account and authorize an individual to trade on behalf of the corporation?

Corporate resolution

A family establishes a trust to manage their wealth, with the parents assigning a trustee to oversee the trust on behalf of their children, who are the beneficiaries. Which of the following is true about the structure of a trust account?

The trustee manages the assets for the benefit of the beneficiaries.

All of the following are benefits of Coverdell Education Saving Accounts except

no income restrictions

Benefits of the Coverdell Education Saving Accounts

1. withdrawals are tax free if used for qualified education expenses.

2. they can be transferred to a sibling if not used by the original beneficiary.

3. they are available for use for K–12.

Which of the following best describes a decedent trust?

A trust that is created after the grantor’s death and funded by the estate.

Which of the following investments would NOT be allowed in a custodial account?

Uncovered Call Options

Many investors like to put a transfer on death (TOD) designation on their brokerage accounts. Which of these are benefits of doing so?

1. The TOD designation avoids estate taxes.

2. The TOD designation avoids probate.

3. The account holder is relieved of decision making in the account.

4. There is flexibility to change beneficiaries as conditions dictate.

2 & 4

Sam Malloy owns a small business and has built a substantial estate both with his business success and his early career as a pro athlete. He would like to begin to move assets out of his estate in a way that allows for an easy transfer to his heirs when he dies. He needs to lower the size of his estate before he passes and hates the idea of a public hearing that is part of probate. Sam should

establish an irrevocable living trust.

An individual wishes to open an account where they are the sole owner and controller of the assets. What type of account is most appropriate for this individual?

Individual Account

Which of the following is not needed when opening a partnership account?

A new account form signed by all the partners

Which of the following statements accurately describes an irrevocable trust?

The grantor relinquishes control over the trust’s assets, and they may be excluded from the taxable estate.

Marsha, Jane, Cynthia, Craig, Jim, and Robert are owners of an account JTWROS. If Craig, Jim, and Robert pass away, then their interest in the account

remains in the account and is now the property of the surviving tenants.

Alan and Barbara Collins have three minor children: Dan, Ellen, and Frank. Which of the following UTMA accounts could be opened?

Barbara Collins as custodian for Ellen Collins

Which of the following statements about a power of attorney (POA) is correct?

A full power of attorney grants the authority to make investment decisions and withdraw assets.

Which of the following individuals is considered a fiduciary?

A trustee designated to administer a trust

Two individuals, John and Sarah, wish to open a brokerage account together, with each person having an equal say in managing the account. However, they also want to ensure that if one of them passes away, the survivor retains full ownership of the account. Which type of account would best suit their needs?

Joint Tenants with Right of Survivorship (JTWROS)