Certified Financial Planner (CFP) Estate Planning Syllabus

Estate Planning syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Estate Planning in Certified Financial Planner (CFP), not a summary of it.

1. 1

   Estate Planning Fundamentals

   4 topics

   • Property Ownership and Titling
     • Joint tenancy and tenancy in common
     • Community property considerations
   • Probate Process and Avoidance
   • Wills and Intestacy
     • Types of wills and codicils
     • Will substitutes
   • Incapacity Planning Documents
     • Durable power of attorney
     • Advance medical directives
2. 2

   Trusts and Estate Transfer Techniques

   4 topics

   • Trust Fundamentals
     • Revocable vs. irrevocable trusts
     • Grantor trust rules
   • Common Trust Types
     • Bypass and marital (QTIP) trusts
     • Irrevocable life insurance trust (ILIT)
     • Charitable remainder and lead trusts
   • Lifetime Gifting Strategies
     • Annual exclusion and gift splitting
     • GRATs and family limited partnerships
   • Powers of Appointment
3. 3

   Transfer Taxation

   4 topics

   • Federal Gift Tax
     • Taxable gifts and unified credit
     • Applicable exclusion amount
   • Federal Estate Tax
     • Gross estate inclusions
     • Deductions and the marital deduction
     • Portability of the exemption
   • Generation-Skipping Transfer Tax
   • Valuation of Estate Assets
     • Alternate valuation date
     • Special use valuation and discounts
4. 4

   Specialized Estate Planning

   4 topics

   • Business Succession Planning
     • Buy-sell agreements
     • Section 6166 deferral and Section 303 redemption
   • Charitable Estate Planning
   • Planning for Nontraditional Families and Special Needs
   • Postmortem Estate Planning Techniques
     • Disclaimers and QTIP elections

Estate Planning flashcards for Certified Financial Planner (CFP)

19 of 51 cards from the Estate Planning deck — real questions with worked answers.

1. What are the three primary forms of concurrent (joint) property ownership, and which one carries an automatic right of survivorship available to any co-owners?

   The three forms are tenancy in common, joint tenancy with right of survivorship (JTWROS), and tenancy by the entirety. JTWROS carries an automatic right of survivorship and is available to any two or more co-owners (tenancy by the entirety also has survivorship but is limited to married couples).

2. In tenancy in common, what happens to a deceased co-owner's fractional interest, and is there a right of survivorship?

   There is no right of survivorship. The deceased tenant's fractional interest passes through their probate estate to heirs or beneficiaries under the will, not automatically to the surviving co-tenants. Interests need not be equal and can be freely transferred during life.

3. What is tenancy by the entirety, and what special creditor protection does it provide?

   It is a form of joint ownership available only to legally married spouses, carrying a right of survivorship. Neither spouse can unilaterally sever it or convey their interest, and in most states the property is protected from the creditors of only one individual spouse.

4. How does a JTWROS-titled asset and a tenancy-in-common asset each pass at death with respect to probate?

   JTWROS property passes automatically by operation of law to the surviving joint tenant(s) and avoids probate. Tenancy-in-common property has no survivorship feature, so the decedent's share passes through probate under the will or intestacy.

5. What is community property, and what income-tax basis advantage does it offer at the first spouse's death?

   Community property is a marital ownership regime (in community property states) where most assets acquired during marriage are owned equally by both spouses. At the first death, BOTH halves of community property receive a full step-up in basis to fair market value, not just the decedent's half.

6. Define probate and state its two principal functions.

   Probate is the court-supervised legal process of administering a decedent's estate. Its two principal functions are (1) validating the will and appointing a personal representative, and (2) settling the estate—paying debts, taxes, and expenses, and distributing remaining property to rightful heirs or beneficiaries.

7. List four common advantages of avoiding probate.

   (1) Privacy—probate records are public; (2) Speed—avoids court delays; (3) Cost savings—avoids court, executor, and attorney fees; and (4) Avoids ancillary probate in other states where real property is held.

8. Name five common will substitutes (techniques) used to transfer property outside of probate.

   (1) JTWROS/tenancy by the entirety, (2) revocable living trusts, (3) beneficiary designations (life insurance, retirement plans), (4) Payable-on-Death (POD) accounts, and (5) Transfer-on-Death (TOD) accounts/deeds for securities and real estate.

9. Compare per stirpes and per capita distribution of an estate.

   Per stirpes ('by the branch') divides the share at each generational branch, so a deceased beneficiary's children split that beneficiary's share. Per capita ('by the head') divides equally among all living members of a designated class, so each individual takes an equal share regardless of branch.

10. What is a holographic will, and what generally distinguishes it from a formal (witnessed) will?

    A holographic will is handwritten and signed by the testator without witnesses. It is recognized in some but not all states. A formal will is typically typed and must be signed by the testator and attested by witnesses (commonly two).

11. What is intestacy, and who generally determines the distribution of an intestate estate?

    Intestacy is dying without a valid will (or with property not covered by a will). Distribution is governed by the state's intestate succession statutes, which dictate shares to surviving spouse, children, and other relatives based on a fixed hierarchy—the state effectively writes the 'will.'

12. What is a testamentary trust, and when does it come into existence?

    A testamentary trust is a trust created by the terms of a will. It does NOT exist during the testator's lifetime; it comes into existence only at the testator's death and the funding assets pass through probate before entering the trust.

13. What is an elective (statutory) share, and what does it protect against?

    An elective share is a surviving spouse's statutory right to claim a minimum portion of the deceased spouse's estate (often around one-third to one-half) regardless of the will's terms. It protects a spouse from being disinherited.

14. What is a durable power of attorney for health care (health-care proxy), and how does it differ from a living will?

    A durable power of attorney for health care appoints an agent to make medical decisions if the principal becomes incapacitated. A living will (advance directive) is a written statement of the principal's own wishes regarding life-sustaining treatment; it directs care rather than appointing a decision-maker.

15. What makes a power of attorney 'durable,' and what is a 'springing' power of attorney?

    A durable power of attorney remains effective after the principal becomes incapacitated (it does not terminate at incapacity). A springing power of attorney becomes effective only upon a specified future event, typically the principal's incapacity, rather than immediately upon signing.

16. What is a DNR order, and how does it differ from a living will?

    A Do-Not-Resuscitate (DNR) order is a physician's order instructing medical personnel not to perform CPR if the patient's heart or breathing stops. A living will is a broader patient document addressing a range of life-sustaining treatment preferences, not just resuscitation.

17. Name the three parties to a trust and define each.

    (1) Grantor (settlor/trustor)—creates and funds the trust; (2) Trustee—holds legal title and manages trust assets per the trust terms and fiduciary duty; (3) Beneficiary—holds equitable/beneficial title and receives the benefits of the trust property.

18. Distinguish a revocable trust from an irrevocable trust regarding estate inclusion and control.

    A revocable trust can be amended or revoked by the grantor, who retains control; its assets are included in the grantor's gross estate and offer no estate-tax savings. An irrevocable trust generally cannot be changed; the grantor gives up control, and properly structured, its assets are excluded from the grantor's gross estate.

19. What is the difference between a simple trust and a complex trust for income-tax purposes?

    A simple trust must distribute all of its income annually, makes no principal distributions, and makes no charitable gifts. A complex trust may accumulate income, distribute principal, and/or make charitable contributions.

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