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CAP GS839 Self-Test Review Questions
with Verified Solutions
The Trust Formula is computed as:
(A) Credibility, Reliability, and Intimacy divided by Self Orientation
(B) Competence, Reasonableness, and Intentionality divided by Self Orientation
(C) Coherence, Research, and Information, divided by Significance
(D) Coherence, Reliability, and Intimacy, divided by Speed ✔✔Credibility, Reliability, and
Intimacy divided by Self Orientation
Scott and Todd Fithian list a number of areas of special expertise that may be found on the virtual planning team. Which of the following is not on that list?
(A) Philanthropy
(B) Family meeting or retreat facilitation
(C) Mentoring heirs
(D) Religious or other leader specializing in moral health or development ✔✔Religious or other
leader specializing in moral health or development
Above the line planning addresses which of these?
(A) The "why" of planning
(B) The "how" of planning
(C) The tools of planning
(D) The cost of planning ✔✔The "why" of planning
The discernment style works least well in which of the following markets?
(A) Emerging Affluent
(B) Affluent
(C) Emerging Wealthy
(D) Wealthy ✔✔Emerging Affluent
A discernment based advisor will likely do the following:
I. Use open ended questions, followed by probing, closed ended questions
II. Confirm understanding before moving ahead ✔✔BOTH
Above the line questions include which of these?
I. "What keeps you awake at night?"
II. "Who is the beneficiary of your IRA?" ✔✔I. "What keeps you awake at night?"
(D) The fundraiser is perceived to have little to add from a technical perspective. ✔✔The
fundraiser is passionate about making the world better.
Below the line planning addresses which of these?
I. The why of the client's plan
II. The how of the client's plan ✔✔The HOW (both "below" and "how" end in - ow)
Which of these statements is (are) true of the "Core Team," as described by the Fithians?
I. Core Team has access to tax, legal, and financial expertise, meets regularly with the client, and shares information with each other.
II. One or more members of the Core Team may meet with outside experts on specialized issues,
thereby forming a Virtual Team. ✔✔BOTH
Below the line planning addresses ____ ✔✔the "HOW" of planning
In a discernment based process for a high capacity client, how, generally, will the discernment interview end?
I. Recommending products, tools, or gifts
II. Recommending an appropriate next step in the process ✔✔II. Recommending an appropriate
next step in the process
As advisors move up from subject matter expert, to subject matter expert plus knowledge of affiliated field, to valuable resource, to trusted advisor, what happens to breadth of of issues addressed, and to depth of relationship?
I. Breadth of issues addressed decreases
II. Depth of relationship increases ✔✔II. Depth of relationship increases
Of the statements below, as to the findings of studies on high net worth clients, all are true, EXCEPT:
A.
The number one concern of the majority of high wealth clients is passing on the most wealth possible, net of tax, to heirs.
B.
High wealth clients are turning increasingly to advisors for help on their philanthropy.
C.
High wealth clients feel that they, rather than advisors, raise the topic of philanthropy
D.
II. Ordinary givers (income less than $100,000) are giving significantly less than a decade ago ✔✔Both
Which statement or statements below best capture(s) the research findings on donor attitudes towards philanthropic advisors?
I. Fundraisers are highly effective in addressing donor interests and concerns.
II. Advisors are highly effective in addressing donor interest and concerns. ✔✔Neither
What is meant by a donor's or client's moral biography? ✔✔The story of the client's life told as a
tale with a moral meaning or purpose
Which of these words comes from a root word meaning love?
I. Charity
II. Philanthropy ✔✔BOTH
What is meant by moral compass? ✔✔Moral compass is the client's sense of moral direction.
Per H. Peter Karoff, the Philanthropic Learning Curve has 6 steps. The first is "Become a donor." What is the sixth? ✔✔Alignment of vision, passion, interests, philanthropy is among the most
exciting and satisfying things you do
Which of these is H. Peter Karoff's "primary test" of philanthropy?
A. Was our purpose noble, were we true to it, and did we in all instances, deeply listen to the community of interest we presume to serve?
B. Was our vision clear, did we implement effectively and efficiently, and did we, to the extent possible, achieve our intended result?
C. Was our purpose noble, were we true to it, and did we achieve our intended result efficiently?
D. Did we listen to the community and achieve for them the results most important to them?
✔✔Was our purpose noble, were we true to it, and did we in all instances, deeply listen to the
community of interest we presume to serve?
H. Peter Karoff has the audacity (a word he likes) to end his essay on philanthropy and poetry with a poem. The final lines of the Maya Angelou poem he cites are, "Sculpt it into/The image of your public self." By "it," she means "the dream." In what way, or ways, might philanthropy, as Peter sees it, sculpt dreams into a public self?
I. The donor has a dream and philanthropy gives it form.
(C) Create an environment where for-profit and nonprofit professionals understand the perspective of his or her peers
(D) Reduce time advisors spend in the planning process ✔✔Reduce time advisors spend in the
planning process
All of the following considerations for giving are mentioned in Bill Wallace's Remarks to Bethesda Country Club, with regard to his family philanthropy, EXCEPT
(A) Honor parents
(B) Give back to a school from which he had gained much
(C) Feel satisfaction in doing the right thing
(D) Reduce taxes ✔✔Reduce taxes
According to the 2013 US Trust Survey of The Philanthropic Conversation, all of these were among the top four things wealthy clients are concerned about with respect to their giving, EXCEPT
A. Having enough for themselves
B. Gift may not be used wisely
C. Lack of connection to the charity
D. Fear that gift will lead to being asked for more money from others ✔✔Having enough for
themselves
With respect to "phronesis," and "discernment," as Paul Schervish uses these term, which statement or statements below is (are) correct?
I. Phronesis (a term deriving from Aristotle) is more than knowledge in the head, it is practical wisdom that achieves successful outcomes under complex rapidly changing conditions, as in war, or diplomacy, chess, or in navigating a sailing ship in high winds
II. Discernment (a term deriving from St. Ignatius Loyola) is seeing who we ourselves are and
the way forward for us under complex conditions that have a moral dimension. ✔✔BOTH
Which figure or figures below fit Paul Schervish's account of "hyperagency"?
I. JFK
II. Bill Gates ✔✔BOTH
Consider these words by H. Peter Karoff: "The primary test for both the poetry and the practice of philanthropy is integrity - was our purpose noble, were we true to it, and did we in all instances, deeply
listen to the community of interest we presume to serve." Which philanthropist below, best meets Peter's test?
The questions Collier highlights as important throughout his book can be described in all the following words, EXCEPT
(A) Probing
(B) Open ended
(C) Analytical
(D) Profound ✔✔Analytical
In the Socratic method, well demonstrated by Collier, the questioner elicits the client's better self by opening lines of thought and letting the client complete them in his or her own way. Having asked, "How wealthy do you want your children to be?" what would be Collier's next move? What will likely be the next thing out of his mouth?
(A) He will listen and then correct any misunderstandings the client may have.
(B) He will listen for an opening and then make his proposal, or case statement.
(C) He will listen, hear, understand, empathize and most likely ask another question related to what the client has said.
(D) He will go on to the next question on his list or fact-finder. ✔✔He will listen, hear,
understand, empathize and most likely ask another question related to what the client has said.
When Collier says family wealth planning should have a "long term focus," he means which of the following?
(A) Longer than 90 days
(B) A year or more
(C) 3-5 years
(D) Several generations, or 100 years ✔✔Several generations, or 100 years
Collier at several points illuminates a "productive tension," as he calls it, between a child's need to find a shared dream, a common destiny, a shared moral identity, with others in the family, and also needing to strike out on his or her own hero's journey, pursuing his or her own conception of happiness. Assume that a given father is autocratic and controlling. Assume he owns a business and wants his daughter to join it. She, on the other hand, is a gifted painter. He says to her that if she pursues her "airy fairy" painting, she will not get one dime from him. Which of these questions below might a trusted advisor ask the father to prevent family tragedy?
I. Shall we write that into the trust?
II. What would you do, as an independent person yourself, if you were her, faced with that ultimatum?
(A) I only
(B) II only
(C) Both I and II
II. Giving children money during the parent's lifetime helps the parents to see how they handle it and to mentor them along.
(A) I only
(B) II only
(C) Both I and II
(D) Neither I nor II ✔✔II only
Collier speaks repeatedly of "successful families." (He has taken the phrase from Jay Hughes, who virtually created the profession of counseling dynastic families on wealth transfer in a family context.) Which of these statements about successful families is (are) true, judging from the Collier text?
I. Successful families treat the family members themselves as the family's key assets.
II. Successful families maintain their financial standing from one generation to the next because they invest in the capacities of the family members themselves.
(A) I only
(B) II only
(C) Both I and II
(D) Neither I nor II ✔✔BOTH
"Operation successful, patient died." Let us say your client or donor has a perfect estate plan in which no estate taxes are paid, even though tens or hundreds of millions of dollars transfer to heirs. Yet a generation later the heirs are miserable, most of the money has been wasted, and the third generation is back to "shirtsleeves," with no inheritance. From this observation, the authors in this assignment draw all of these conclusions, EXCEPT
A.Plans on paper matter, but so does how well those plans are executed over the generations
B.How plans are executed will depend on how well heirs are mentored, educated, parented, coached and trained
C.Family governance, including family council, family fund or bank, and a formal process of developing procedures and practices drawn from family vision and principles are all important, as important as tax planning
D.Addressing human issues is inappropriate on a planning team, ✔✔Addressing human issues is
inappropriate on a planning team, since these issues are personal and private and do not often admit of solutions
The late Reverend Peter Gomes at Harvard begins by saying, "My thesis involves the distinction between making a living and making a life...." He goes on to make a strong plea for which of these?
A. Making a good living while doing as little harm as possible
B. Raising a flourishing family
C. Passing on family values
A. HEMS provisions are quite common in a trust set up to benefit a family member or members.
B. HEMS provisions address who can get what money for what purposes from the trust
C. HEMS stands for Health, Education, Maintenance, and Supervision
D. HEMS provisions provide guidance to a trustee, but do leave a zone of discretion as well, in applying the standards ✔✔C. HEMS stands for Health, Education, Maintenance, and SUPPORT.
Marie is one of three sisters whose parents set up a trust for their financial security. The sisters are fed up with the trustee, and the trust company, and would like to move the trust to another bank. Which provision or provisions below would be helpful to them, in getting the trust moved, if it is found in the trust?
I. HEMS
II. Decanting
A. I. only
B. II. only
C. Both I. and II.
D. Neither I. nor II. ✔✔II Only decanting provisions address moving the trust (Another option
not given is a "trust protector" who can intervene between the trustee and the beneficiaries, to protect the beneficiaries interests.)
"The law of unintended consequences." With respect to multi-generational planning, which example or examples below illustrate(s) that law with respect to trusts?
I. Client asks for tax minimization, protection of assets, and a secure income for life for heirs. Advisors puts in place a trust that meets these goals. Heirs decide never to work, and frequently complain that the trust is more a curse than a blessing.
II. Client asks that her heir be set up for life in a way that discourages him from leading an unproductive life. The advisor sets up a trust that makes distributions to cover health, education, maintenance, support. Under "maintenance" the trust is instructed to pay for the heir's wedding. The heir marries and divorces his wife every year, in order to have a lavish party at a destination resort.
A. I. only
B. II. only
C. Both I. and II.
D. Neither I. nor II. ✔✔BOTH
What is meant by a three part allowance? ✔✔One part to save, one part to spend, one part for
charity
Why might a child of wealth feel isolated?
I. Set apart by privileges and possessions that classmates do not have
