CSI Applied Financial Planning Certification Exam 1 (AFP) Sample Questions:

1. If a deceased person was entitled to rights or things at death, what strategy should the estate representative use to enhance the net estate value after tax?

A) Transfer ownership of the rights or things to the beneficiaries of the estate.
B) File for annual tax reassessments on the terminal tax return until all rights or things are paid.
C) Include the rights or things in a second personal tax return for the deceased.
D) Include the rights or things in the deceased's final personal tax return.

2. Mary, an accredited financial planner, recently met with clients Michael and Radha. They are high- net-worth clients who are in their mid-40s. Michael is a heavy equipment operator at a local oil field, and Radha is a homemaker. They are ready to retire in 10 years and very excited to start planning for the next chapter in their lives. Mary explained her planning process, her accreditation, and her remuneration. When Mary presented the client agreement letter, both clients were surprised. They said they did not know why they would sign a letter to get advice on their own finances. How should Mary answer their question?

A) The client agreement letter is a non-legally binding contract that outlines the business relationship between the clients and the financial institution.
B) The client agreement letter sets expectation for the partnership between, the client, the financial planner and their partners.
C) The client agreement letter outlines the overall investment strategy that is being recommended by Mary to Michael and Radha.
D) The client agreement outlines the specific financial planning strategies that will be implemented to help both Michael and Radha achieve their financial goals.

3. A married couple has a $480,000 mortgage with 15 years remaining. They want the mortgage retired if either spouse dies during that period. What insurance structure best fits this objective?

A) Joint permanent last-to-die policy.
B) Individual annuities for both spouses.
C) Joint 15-year term first-to-die policy.
D) Joint 15-year term last-to-die policy.

4. Matias is working on estate planning recommendations for his client Cynthia. After a recent meeting, Matias is confident that an estate freeze would be the best option for her. Which factor would have determined that the estate freeze was the best recommendation for him to give Cynthia?

A) The economy is about to enter a period of hyper-inflation.
B) She can afford to live on a fixed stream of income.
C) She requires flexibility in updating beneficiaries.
D) Her children have higher marginal tax rates than her.

5. Chris is a self-employed contractor discussing his retirement plans with his financial planner, Joseph. Chris is considering incorporating his business and drawing funds from his corporation to fund his retirement income, yet he wants to ensure it does not impact his business's financial position. What advice should Joseph give to Chris?

A) Speak with a lawyer to review the impact of incorporating.
B) Speak with an accountant to review the impact of incorporating.
C) Consult an online service that helps individuals incorporate.
D) Inform Chris of the impacts of incorporating and recommend any changes he feels are appropriate.

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