STEP Canada TEP Sample Questions & Practice Test

Trust and Estate Practitioner (TEP) preparation should test professional judgment: estate objectives, trust mechanics, fiduciary duties, beneficiary interests, incapacity planning, tax-aware context, conflicts, and documentation.

TEP exam snapshot

What TEP practice should test

• recognizing estate, trust, beneficiary, fiduciary, and incapacity planning issues
• separating tax-aware planning context from legal or tax advice
• choosing professional escalation steps when conflicts, capacity, or documentation issues appear
• applying client-intent, duty, evidence, and administration logic to case-style facts

Sample Exam Questions

Try these 12 original TEP sample questions. They are not official STEP Canada questions and do not reproduce a live exam.

Question 1

Topic: Fiduciary duties

A trustee wants to invest trust assets in a private company owned by the trustee’s family. What is the main professional concern?

• A. The trustee may have a conflict of interest and must consider duty, authority, disclosure, and independent advice
• B. The investment is always required if expected returns are high
• C. Beneficiaries have no interest in trustee decisions
• D. Private companies are never assets

Best answer: A

Explanation: Fiduciary roles require loyalty, prudence, and conflict management. A family-owned investment creates a conflict that should be addressed before any decision.

Question 2

Topic: Capacity

A client signs estate documents while a family member answers every question and pressures the client to hurry. What should the professional notice?

• A. Family involvement always proves capacity
• B. The documents should be accepted without questions
• C. Pressure is irrelevant in estate planning
• D. The facts may raise capacity, undue influence, and documentation concerns

Best answer: D

Explanation: Capacity and undue influence are practical estate-planning risks. A professional should slow down, document observations, and involve appropriate legal advice when concerns exist.

Question 3

Topic: Beneficiary interests

A will leaves assets equally to two beneficiaries, but the executor wants to make an unequal interim distribution to one beneficiary without explanation. What is the best concern?

• A. Executors never need records
• B. The executor should consider the will terms, estate liquidity, fairness, documentation, and beneficiary communication
• C. Interim distributions are always prohibited
• D. Beneficiaries cannot ask questions

Best answer: B

Explanation: Executors must administer according to the governing documents and duties. Interim distributions require care because estate debts, taxes, equalization, and records may affect the final result.

Question 4

Topic: Trust terms

A discretionary trust gives trustees authority to distribute income among a class of beneficiaries. What is the key planning point?

• A. Trustees may ignore the trust deed
• B. Beneficiaries automatically receive equal income every year
• C. Trustees must exercise discretion within the trust terms and document their reasoning
• D. Discretion removes all fiduciary duties

Best answer: C

Explanation: Discretion must be exercised properly. Trustees should follow the deed, consider relevant factors, avoid improper purposes, and keep records.

Question 5

Topic: Incapacity planning

Why might a client use powers of attorney or similar incapacity documents?

• A. To plan who can act if the client cannot manage property or personal decisions
• B. To remove the need for a will
• C. To guarantee no family dispute can occur
• D. To transfer all assets immediately in every case

Best answer: A

Explanation: Incapacity planning identifies decision-makers and authority before incapacity occurs. It complements, rather than replaces, estate planning.

Question 6

Topic: Probate and administration

Why might probate or estate-administration requirements matter in planning?

• A. They never affect beneficiaries
• B. They are always avoided by naming any beneficiary
• C. They replace tax reporting
• D. They can affect timing, evidence of authority, costs, and practical asset transfer

Best answer: D

Explanation: Probate and administration are practical issues. The professional should understand the planning context while avoiding unauthorized legal advice.

Question 7

Topic: Tax-aware planning context

A client wants to transfer a cottage to adult children during life. What is the best professional response?

• A. Recommend the transfer immediately without reviewing consequences
• B. Treat the transfer as non-taxable in every case
• C. Identify possible tax, family, creditor, control, and succession issues and coordinate with qualified advisers
• D. Ignore family-use expectations

Best answer: C

Explanation: Inter vivos transfers can have tax and non-tax consequences. A careful professional recognizes issues and coordinates legal and tax advice.

Question 8

Topic: Estate freeze

What is the main purpose of an estate freeze in a family-business context?

• A. To eliminate all tax and legal review
• B. To shift future growth to successors while fixing or managing the current owner’s economic interest
• C. To prevent any successor from owning shares
• D. To convert every asset into cash

Best answer: B

Explanation: Estate freezes are planning tools for business succession and value management. They require tax, legal, valuation, and family-governance review.

Question 9

Topic: Documentation

An adviser recommends a complex estate structure but keeps no notes about objectives, risks, or professional referrals. What is the main weakness?

• A. Notes are useful only for investment accounts
• B. Estate planning never needs objectives
• C. Referrals should never be documented
• D. The recommendation lacks an evidence trail for suitability, informed decision-making, and professional boundaries

Best answer: D

Explanation: Documentation protects the client and professional. Complex planning should show objectives, assumptions, risks, advice boundaries, and referral steps.

Question 10

Topic: Blended families

Why can blended-family estate planning require extra care?

• A. Competing expectations among spouse, former spouse, children, stepchildren, and dependants can create planning and dispute risks
• B. Blended families never need wills
• C. Beneficiary designations are always enough
• D. Only investment returns matter

Best answer: A

Explanation: Blended families can create competing expectations and legal or practical risks. Planning should clarify objectives, obligations, beneficiary designations, and estate documents.

Question 11

Topic: Charitable gifts

A client wants to leave a large charitable gift but also support dependants. What should the professional consider?

• A. The charity always takes priority over all other planning issues
• B. Dependants are irrelevant if a charity is named
• C. Estate liquidity, dependant needs, tax-aware context, documentation, and qualified legal advice
• D. Charitable gifts require no records

Best answer: C

Explanation: Charitable planning should be integrated with estate obligations, liquidity, dependants, tax context, and documentation.

Question 12

Topic: Professional boundaries

A client asks a financial adviser to draft trust wording for a will. What is the best response?

• A. Draft the clause because the client trusts the adviser
• B. Explain the planning issue and refer the client to qualified legal counsel for drafting
• C. Use generic wording found online
• D. Avoid documenting the referral

Best answer: B

Explanation: Trust and will drafting is legal work. The adviser can identify planning issues, coordinate, and document the referral without crossing professional boundaries.

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