LLQP Segregated Funds & Annuities · Component 1.2 · 35% of the exam
A client's registered plan names his estate as beneficiary and he has a spouse. The review should point out:
- AThat the spouse may claim the plan from the estate without any tax consequence to the estate
- BThat the estate designation produces the same result as naming the spouse, so no change is needed
- CThat the designation is void, since a registered plan must name the spouse as beneficiary
- That naming the spouse directly allows a tax-deferred rollover and avoids probate on the plan
Correct answer: D) That naming the spouse directly allows a tax-deferred rollover and avoids probate on the plan
A direct spousal designation both defers the tax and keeps the plan out of the estate, neither of which follows automatically from an estate designation.
Why the other options are wrong
- ATax is settled on the deceased's final return before distribution.
- BThe tax and probate outcomes are materially different.
- CAn estate designation is valid, merely suboptimal here.
Exam tip
Name the spouse directly to get the rollover and skip probate.
Common mistake
Leaving an estate designation on a registered plan where a spouse survives.
What this tests
CISRO competency component 1.2 — Assess the client's needs and situation — which is weighted at 35% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 1
- The first step before recommending a segregated fund or annuity is to:
- A client's 'time horizon' for an investment is:
- 'Risk tolerance' in an investor profile refers to:
- A client says he wants 'high returns with no risk of losing money'. The agent should:
- Investment objectives are commonly classified as:
- Why is the client's marginal tax rate relevant to a segregated fund recommendation?
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.