LLQP Segregated Funds & Annuities · Component 2.2 · 30% of the exam
A distinctive estate advantage of a segregated fund over a non-registered mutual fund held jointly with a child is:
- ASegregated funds cannot name children as beneficiaries, so joint ownership is the only way to pass them the money outside the will
- BNone, since both routes deliver the asset to the child without probate and with the same tax result
- CJoint accounts are always better, since the child has immediate access and the transfer is automatic
- The designation transfers the death benefit cleanly without the ownership, control and tax problems of joint accounts
Correct answer: D) The designation transfers the death benefit cleanly without the ownership, control and tax problems of joint accounts
Joint ownership with adult children is a common but risky probate-avoidance tactic; designations achieve the goal with fewer side effects.
Why the other options are wrong
- AChildren can be named as beneficiaries.
- BThe designation route avoids joint-account pitfalls.
- CJoint accounts with children carry real risks.
Exam tip
Designation beats joint ownership with children for probate avoidance.
Common mistake
Recommending joint accounts with children as the probate solution.
What this tests
CISRO competency component 2.2 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 2
- A segregated fund's 'guaranteed amount' after a partial withdrawal under proportional reduction is:
- Segregated fund guarantees are most valuable relative to their cost when:
- A segregated fund's annual statement reports:
- Compared with a segregated fund, an exchange-traded fund (ETF) generally offers:
- A segregated fund's 'automatic death benefit reset' feature:
- An 'excess withdrawal' under a GMWB contract:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.