The CII J02 April 2018 Exam in Review

Next in line for our exam paper analysis is J02, the exam which covers trusts – useful for those preparing to sit CII J02.

You can find the latest exam – April 2018 – by visiting the CII website.

Two hours are allowed for the J02 paper which is made up of 15 short-answer questions and carries a total of 130 marks.

Starting with Discretionary Trust

The paper started with a question on a discretionary trust, and candidates had to explain the trustee’s role when dealing with existing assets. Then they had to give four examples of specific powers that the trust deed gives them when the trust contains shares and life policies.

Skimmers beware

The second part was very specific and may have been challenging if the candidate had skimmed over the section on powers of trustees; however, paying premiums on the life policy and buying and selling shares hopefully would have sprung to mind to pick up some of the marks.

Will be interesting to see the exam guide

The next question asked for a description of the protector of an offshore trust – this was for 7 marks so it will be interesting to see where those 7 marks are given in the model answer when the exam guide is issued.

A Lot of Marks

Question 3 was on creating a settlement split over two parts for 9 marks, and then for 10 marks, candidates had to explain the actions trustees should take in order to ensure the trust investments satisfy the standard investment criteria and again this seems like a lot of marks.

Covering Various Learning Outcomes

The exam then covered the various learning outcomes on charitable trusts for a total of 9 marks, a lasting power of attorney for 10 marks; the impact of not having a will for an unmarried couple with a son for 7 marks, a question on disclaimers for 9 marks; bankruptcy for 6 marks; the process for setting up an IVA for 10 marks; taxation of an IIP trust for a total of 9 marks (and this covered both income tax and CGT) and  IHT charges on a discretionary trust for 10 marks.

Back to the Basics

So far, this paper feels to us a bit tougher than previous papers.  However, Question 13 took us back to basics as candidates had to state the main advantages of a settlor writing a whole of life policy in trust and how the premiums would be treated for IHT – hopefully this was an easier 10 marks to achieve.  Question 14 was another 10-mark question this time on back-to-back plans and finally, the last question asked to state 6 factors that trustees would need to consider upon the death of a beneficiary.

Comparison with the October 2017 Paper

If we compare this to last October’s paper it does seem to us that April’s paper was tougher.

The October 2017 paper can be found here.

Candidates had more straightforward questions, such as having to explain the legal definition of a trust; identifying four main types of beneficiary and their beneficial interest; other familiar areas such as perpetuity periods and the Variation of Trusts Act 1958 and then the topics that are always tested such as powers of attorney, the mental capacity act, estate administration, the duties of trustees, bankruptcy and the taxation of trusts.

There certainly didn’t appear to be the same number of challenging questions as this last paper.

J02 has a well written manual but includes a lot of technical detail

J02 covers a specialist subject and candidates sitting the exam will hopefully have some experience of working with trusts.  The manual is well written and manageable in size, but there is still a lot of technical detail, which, as we have seen in the April exam, can be tested.  A successful candidate will be one who has studied the learning outcomes and carefully prepared a study schedule.

Grab the resources you need!

If you’re studying for your CII J02 exam, and you’re wanting to be thoroughly prepared, grab our free taster to try out one of Brand Financial Training’s resources for yourself.  Click the link to download the J02 mock paper taster now!