Bruce Starks, CPA, CFP® – Page 23

Crummey Powers

Course: Insurance PlanningLesson 16: The Irrevocable Life Insurance Trust Student Question: Must Crummey powers always be in effect to apply the annual gift tax exclusion in order to transfer to an irrevocable trust? Or is it the case that as long as it was done once, will all transfers be eligible for the annual gift tax exclusion?…

Having Your Cake and Eating it Too: Equity Swap Contract

Good to Know Think about this situation. You have a client who has a significant amount of their wealth in a concentrated position. This might be because they are an executive with a company and have received equity-based compensation over the years or simply have accumulated the position through an inheritance or other means. Regardless…

Custodial Accounts and Gifting

Course: Estate PlanningLesson 13: Case Study Online Student Question: If a check given by Mary to Peter was deposited into a custodial acct where Mary was the custodian, doesn’t that mean that Mary didn’t give up ALL control, so it’s not a complete gift? Instructor Response: Generally, the donor must give up all ownership and…

Get In Trouble with the SEC — You’re In Trouble with CFP Board

CFP® Certificants in the News CFP® certificants licensed to sell securities are subject to SEC’s Regulation Best Interest (Reg BI) if they make recommendations to retail customers. This article illustrates the reach of Reg BI into potential CFP Board discipline. Here’s the game plan: Identify key terms, Disclose SEC involvement in a Reg BI violation,…

Value of Life Insurance in Buy-Sell Agreements

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:…

Protect Concentrated Positions With No Out-of-Pocket Cost

Good to Know Unmanaged concentrated position risk can be a ticking time bomb in your client’s portfolio. For example, one of the nation’s oldest (founded in 1879) and most respected banks was trading at $38/share in 2007. It had a long-term, loyal stockholder following, many of whom with holdings — accumulated over generations — valued…

Deducting Gifts to Customers

Course: Income Tax PlanningLesson 10: Recognition of Expenses, Losses, and Deductions Student Question: Can you clarify the deductibility of gifts when we’re talking about employees of a business versus self-employed individuals? It seems the rules have changed on these. Instructor Response: An employee (W2 employee or statutory employee) can no longer deduct unreimbursed gifts to…

Financial Planning and Happy Marriages

Good to Know Question: What can be a more common cause for divorce than infidelity? Answer: Unresolved money conflicts.1 While being on the same page over money may not guarantee the coveted fiftieth anniversary, fighting over money can undermine marriages well before the golden anniversary. The issues vary, but communication around marital finances can…

Life Insurance in a Cross-Purchase Buy-Sell Agreement

Course: Insurance PlanningLesson 17: Business Uses of Life and Disability Insurance Student Question: I have a quick question regarding buy/sell agreement. I’m not clear on who would pay the premiums on disability and or life insurance on the principals and the key employees? Instructor Response: Great question. A buy-sell agreement relates to owners of the…

Get the Bear, or the Bear Gets You

Good to Know Loss aversion, taken to its extreme, can wreck long-term retirement planning and investment success. We’ll unpack what drives “irrational” loss aversion, identify a dangerous decision error, and illustrate a potential guardrail to remain on track with our long-term investing plans. “Irrational” Loss Aversion We’re a logical, evolved species, right? Before you answer,…