Certified Financial Planner (CFP) Practice Exam 2025 – All-in-One Study Guide for Exam Success!

Image Description

Question: 1 / 505

What is the primary benefit of using a qualified trust in financial planning?

Tax-free withdrawals for beneficiaries

Protection against creditors

Eligibility for government benefits

The primary benefit of using a qualified trust in financial planning relates to eligibility for government benefits. A qualified trust can ensure that the assets held within it do not negatively impact a beneficiary's ability to qualify for certain needs-based government benefits, such as Medicaid or Supplemental Security Income (SSI). This can be particularly important for individuals with disabilities or those requiring long-term care, as maintaining eligibility for these programs is crucial for securing necessary services and financial support.

The structure of a qualified trust creates a separation between the beneficiary's personal assets and the trust's assets, which can help in demonstrating that the beneficiary does not have excessive resources that may disqualify them from receiving needed assistance. This strategic planning tool allows individuals to provide for their loved ones while also navigating the complexities of governmental eligibility requirements.

Get further explanation with Examzify DeepDiveBeta

Higher returns on investment

Next Question

Report this question

Download Certified Financial Planner (CFP) Practice Exam PDF Study Guide
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy