CSI AFP-Exam-1 Value Pack (Frequently Bought Together)

Dianna has just taken a 20-year mortgage and wants insurance only to ensure the mortgage can be repaid if she dies during that period. She is considering whole life insurance. What should her planner most likely explain?

• A. No insurance is needed if the mortgage is insured by the lender.
• B. Whole life is always cheaper for temporary mortgage needs.
• C. Critical illness insurance replaces life insurance for mortgage protection.
• D. Term insurance is generally better aligned with a temporary liability.

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A client, age 60, is in a low tax bracket today and expects a larger taxable pension after age 65. She has TFSA and RRSP room. Which contribution priority is generally more appropriate?

• A. TFSA, because withdrawals will not increase taxable retirement income.
• B. RRSP, because withdrawals are tax-free.
• C. RRSP only after the client turns 72.
• D. Non-registered account only, because registered accounts are unsuitable after age 60.

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Richard pays periodic spousal support and child support under a written separation agreement. Which statement is generally correct?

• A. Qualifying periodic spousal support may be deductible to Richard and taxable to the recipient, while child support is generally neither deductible nor taxable.
• B. Both spousal and child support are always deductible to Richard.
• C. Child support is taxable to the recipient if paid monthly.
• D. Spousal support is never relevant for tax planning.

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Keitaro, age 42, and Ruth, age 52, are married and have two children - Maximo, age 20, and Hannah, age 16, both from Keitaro's previous marriage. In the event Keitaro dies, he would like to minimize taxes, provide for Ruth for the remainder of her life, and then after her death leave the residual to his children. What estate planning strategy should his financial planner recommend to help Keitaro achieve his goal?

• A. Transfer his assets to an inter vivos spousal trust through a will and name his children as capital beneficiaries.
• B. Transfer his assets to an inter vivos spousal trust through a will and name his children as income and capital beneficiaries.
• C. Transfer his assets to a testamentary spousal trust through a will and name his children as capital beneficiaries.
• D. Transfer his assets to a testamentary spousal trust through a will and name his children as income and capital beneficiaries.

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Richard reviewed his divorce settlement from his partner Alex with his advisor Maria. He is deciding between providing a lump sum spousal support payment of $60,000 or making monthly payments. If Richard's income is $200,000 and Alex's income is $40,000, what should Maria advise Richard about the tax implications for both Richard and Alex in regard to the lump sum payment?

• A. Richard will pay taxes on the entirety of the $200,000 and Alex will pay taxes only on his earned income of $40,000.
• B. Richard will deduct half of the lump-sum support payment and pay taxes on the remaining $170,000 of income and Alex will claim the other half of the lump-sum support payment in addition to his earned Income of $40,000.
• C. Richard will deduct the payment and pay taxes on the remaining $140,000 of income, and Alex will pay taxes on the lump-sum payment of $60,000.
• D. Richard will deduct the payment and pay taxes on the remaining $140,000 of income and Alex will pay taxes only on his earned income of $40,000.

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