Test Bank Questions, Web Chapter C
1. Assets that were generated or acquired during marriage are:
a. Marital assets
b. Nonmartial assets
c. Premartial assets
d. Postmartial assets
e. None of the above
2. Which of the following is not a relevant factor in a division of assets during divorce
planning?
a. Amount of nonmarital assets.
b. Needs of the individual parties.
c. Circumstances of Breakup.
d. All of the above are relevant factors.
e. None of the above is a relevant factor.
3. Which of the following is not one of the three principal sources or distributions of
financial resources in a divorce settlement?
a. Property
b. Revenue
c. Alimony
d. Child support
e. None of the above
4. Property usually refers to:
a. The tangible assets owned by household members
b. The financial assets owned by household members
c. The real estate owned by household members
d. Both a and b
e. None of the above
5. Under a Qualified Domestic Relations Order,
a. The spouse is entitled to one-half the value of assets in a pension, and no transfer
of those assets can be made without his or her approval
b. The spouse is entitled to the entire value of assets in a pension, and no transfer of
those assets can be made without his or her approval
c. The spouse is entitled to one-half the value of assets in a pension, though transfer
of those assets can be made without his or her approval
d. The spouse is entitled to the entire value of assets in a pension, though transfer of
those assets can be made without his or her approval
e. None of the above
6. Alimony is often referred to as:
a. Preservation
b. Protection
c. Maintenance
d. Continuation
e. None of the above
7. Alimony payments are:
a. Taxable to the payer at ordinary income rates and is tax-deductible by the
recipient
b. Taxable to the recipient at ordinary income rates and is tax-deductible by the
payer
c. Taxable to both the payer and recipient at ordinary income rates
d. Is tax-deductible by both the payer and recipient
e. None of the above
8. Child support payments:
a. Have no taxable impact on either the payer or the recipient
b. Taxable to the payer at ordinary income rates and is tax-deductible by the
recipient
c. Taxable to the recipient at ordinary income rates and is tax-deductible by the
payer
d. Taxable to the child at ordinary income rates and is tax-deductible by the payer
e. None of the above
9. A former spouse is entitled to:
a. A Social Security benefit equal to 40 percent of the higher earning spouse’s
benefit, provided they were married for 8 years or more
b. A Social Security benefit equal to 50 percent of the higher earning spouse’s
benefit, provided they were married for 10 years or more
c. A Social Security benefit equal to 60 percent of the higher earning spouse’s
benefit, provided they were married for 12 years or more
d. A Social Security benefit equal to 70 percent of the higher earning spouse’s
benefit, provided they were married for 4years or more
e. None of the above
10. Which of the following is an advantage associated with using a divorce lawyer?
a. May protect the uninformed
b. May reduce the possibility of hidden or underappraised assets
c. May result in higher payouts
d. All of the above
e. None of the above
11. Which of the following is not a reason why second marriages often involve assets
brought to the marriage that remain in each person’s name rather than being fully
integrated?
a. The expectation that the second marriage will fail
b. Separate obligations from a previous marriage
c. A more cautious attitude as one gets older
d. Sizeable assets that have been accumulated
e. All of the above are reasons
12. Which of the following statements is inaccurate?
a. A prenuptial agreement is usually done when one party has much greater assets
than the other and wants to protect them
b. A prenuptial agreement provides for temporary separation of assets when one or
more parties want to leave their money to someone else
c. A prenuptial agreement must be voluntary
d. All of the above statements are inaccurate
e. All of the above statements are accurate
13. Agreements that are entered into after marriage that provide the terms upon breakup
due to death or divorce are called:
a. Prenuptial agreements
b. Postnuptial agreements
c. Divorce mediation
d. Divorce arbitration
e. None of the above
14. The rights and requirements of marriages:
a. Are statutory
b. Can transcend any contract or other understanding between the individuals
c. Apply to both traditional and nontraditional marriages.
d. Both a and b
e. Both b and c
15. Unmarried couples who have retirement assets in joint name would have to prove that
they contributed their monies as otherwise:
a. Assets are seized by the government
b. Assets received during their lifetime could be considered a gift which could
subject it to the combined estate gift tax
c. Assets are subject to double taxation
d. Both a and b
e. Both b and c
16. Which of the following is an advantage associated with not qualifying for marital
recognition?
a. The household members can engage in income shifting
b. There is no liability for repaying the debts of the non marital partner
c. One member may more easily qualify for federal aid in some circumstances
d. All of the above are advantages
e. Both b and c
17. How does property insurance planning differ between married and unmarried
couples?
a. By an unmarried couple, only one individual requires a homeowner’s property
and automobile policy
b. By a married couple, a single homeowner’s property and automobile policy
automatically covers both husband and wife
c. By an unmarried couple, a separate homeowner’s property and automobile policy
is required to cover both people
d. Both a and b
e. Both b and c
18. Which of the following is not a reason why a business may buy life insurance?
a. So that it has funds to provide for the replacement of a key person
b. To diversify assets
c. To eliminate taxes
d. Both a and b
e. Both b and c
19. Upon the death of the owner of a closely held business,
a. The estate has the option of deferring taxation for two years
b. The estate has the option of deferring taxation for five years
c. The estate has the option of deferring taxation for fourteen years
d. The estate does not have the option of deferring taxation
e. None of the above
20. Which of the following is a method through which to effect transfers of a close held
business in a tax efficient way?
a. An employee stock ownership plan
b. An employee limited partnership
c. A family limited stock ownership plan
d. Both a and b
e. Both b and c
21. The right to buy a stock at a specific price for a specific period of time is called a:
a. Futures contract
b. Forward contract
c. Stock option
d. Forward option
e. None of the above
22. Incentive stock options are:
a. Options that are not taxable to the recipient when the option is granted, even if the
market price of the stock is higher at that time than the option price
b. Options that are not taxable to the recipient when the option is granted, unless the
market price of the stock is higher at that time than the option price
c. Options that are not taxable to the recipient when the option is granted, unless the
market price of the stock is lower at that time than the option price
d. Options that are provided as an incentive for a manager to retire
e. None of the above
23. Which of the following are not taxable to the recipient when the option is granted, but
are taxed when the option is exercised?
a. Qualified stock options
b. Nonqualified incentive options
c. Nonqualified stock options
d. Qualified incentive options
e. None of the above
24. The percentage of the U.S. population with disabilities has been estimated at:
a. 20 percent
b. 10 percent
c. 2 percent
d. 1 percent
e. None of he above
25. What is a springing power of attorney?
a. A power of attorney that is transferred to another individual at a defined point of
time in a disability.
b. A power of attorney that takes effect at a defined point of time in a disability.
c. A power of attorney that takes effect retroactively.
d. A power of attorney that takes effect immediately.
e. None of the above.
26. What does Supplemental Security Income provide?
a. Income for food, clothing, and shelter.
b. Medical payments.
c. Comprehensive income for retirements.
d. Drug payments.
e. None of the above.
27. Which of the following is not a factor that may be detailed in a letter of intent for
special needs planning?
a. The operational factors involved with the care of the person
b. An explanation of what is wrong with the incapacitated
c. A list of all professionals and family members
d. All of the above are factors
e. None of the above is a factor
28. To lower taxes under a gifting program, each beneficiary can be given:
a. $14,000 per year, or $28,000 with spousal consent per year
b. $11,000 per year, or $22,000 with spousal consent per year
c. $110,000 per year, or $220,000 with spousal consent per year
d. $100,000 per year, or $200,000 with spousal consent per year
e. None of the above
Essay questions:
29. For each of the following, explain why it is a relevant factor in a division of assets
during divorce planning:
a. Amount of nonmarital assets.
b. Needs of the individual parties.
c. Historical cost of living.
d. Circumstances of Breakup.
e. Human Assets.
30. Please list three divorce payment alternatives, and indicate the tax deduction, taxable
income, and appraisal characteristics of each.
31. For each of the following retirement planning, insurance, and estate issues, please
detail the differences between married and unmarried couples.
Retirement Planning
• Social Security
• Company Pension
• Home
Insurance
• Life
• Property
• Medical
Estate
• Marital Exemption
• No Will
• IRA
• Child
• Taxation
