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Owner of a Grantor Trust

By Dan Madden, CFP®

In which of the following situations would the grantor of a trust not be considered the owner? The grantor has a reversionary interest in the trust, of which the grantor’s son is the sole beneficiary, but the grantor cannot exercise this power until eight years after transfer of property to the trust. The grantor retains…

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Social Security Bankruptcy—Fear or Fact?

By Bruce Starks, CPA, CFP®

Good to Know Social Security consists of two major benefit programs-disability and retirement/survivorship.  We’ll address these programs in just a moment, but first, the author will contrast the crucial difference between Social Security “solvency” and “bankruptcy.” Solvency is the ability to pay 100% of benefits. Bankruptcy is the inability to make any significant benefit payments.…

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Maximum Family Benefit

By Bruce Starks, CPA, CFP®

Course: Insurance PlanningLesson 10: Social Security Student Question: Does the maximum family benefit apply to a husband and wife that are both fully insured if the combined total between the two exceeds the maximum family limit? If I understand correctly, the maximum family limit only applies if there are beneficiaries within the family receiving benefits…

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OASDI Disability Income Benefits

By Dan Madden, CFP®

Which of the following statements concerning OASDI disability income benefits is correct? Disability is defined as the inability to perform all major duties of the insured’s own occupation. Unless specifically exempted, a waiting period of 12 months must be satisfied. If the disabled worker is also receiving workers compensation benefits, the full OASDI benefit is…

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Will 401(k) Rollovers Equal Advisors’ Fiduciary Responsibility?

By Bruce Starks, CPA, CFP®

CFP® Certificants in the News The CFP Board’s recent news release opined that “The Department of Labor’s new retirement security rule standard expanding fiduciary duties will likely face legal opposition. Advocates for the rule, including CFP Board, plan to submit amicus briefs in support of the DOL in any lawsuits.” The news release cites an…

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Value of Life Insurance in Buy-Sell Agreements

By Bruce Starks, CPA, CFP®

Course: Insurance PlanningLesson 17: Business Uses of Life Insurance Student Question: Do buy sell agreements accounts for projected growth of the company?  Do the life insurance benefits increase over time to account for projected growth, or perhaps can they invest and grow conservatively to keep up with inflation (or COLA on the plan)?  Instructor Response:…

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Underinsured Dwelling Penalty

By Dan Madden, CFP®

Sam carries an H0-3 policy with $500,000 of coverage and a $2,000 deductible. It would cost $700,000 to rebuild Sam’s house. How much will his insurance company pay on a $200,000 claim related to a fire that started in Sam’s kitchen? $176,571 $178,571 $231,235 $198,000 CLICK TO REVEAL ANSWER Expand A is the answer. Frank…

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Fiduciary Rule Rises Again

By Bruce Starks, CPA, CFP®

Good to Know If the term “Department of Labor Fiduciary Rule” sounds familiar, there’s a reason. The DOL’s previous Fiduciary Rule (2016) was a failed regulatory effort that was struck down by the Fifth Circuit Court of Appeals in 2018. The Court held that the DOL exceeded its authority. One perspective of the Court’s ruling…

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Interest Rate Risk in a Bond

By Bruce Starks, CPA, CFP®

Course: Investment PlanningLesson 10: Fixed Income Securities Analysis Student Question: I’m not clear why holders of long-term bonds are subject to interest rate risk. If a 20-year bond is purchased at par with a coupon rate of 6.25% ($62.50/year), it seems to me that the investor would still receive $62.50 a year regardless of interest rate changes. What…

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