Certified Trust and Fiduciary Advisor (CTFA) Practice Exam 2025 – All-in-One Guide to Exam Success!

Both IRAs and life insurance beneficiary designations share the characteristic of avoiding probate upon the owner’s death. This means that when the owner passes away, the assets held in an IRA or the proceeds from a life insurance policy are transferred directly to the designated beneficiaries without undergoing the often lengthy and public probate process.

This direct transfer mechanism is crucial for ensuring that beneficiaries receive their inheritance in a timely manner, as it bypasses potential delays associated with probate court proceedings. For those who have taken the steps to designate beneficiaries on their accounts, it ensures that their financial plans align with their intentions without the complications of the probate process.

The other characteristics mentioned in the options, such as going through probate, being revocable upon the owner’s request, and being considered part of the taxable estate, do not apply to both IRAs and life insurance beneficiary designations in the same way. For example, while certain aspects of IRAs may impact the taxable estate, the non-probate nature of these assets is a significant factor that enhances their attractiveness for estate planning purposes.