Bruce Starks, CPA, CFP® – Page 5

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:…

Emerging Trends for Long-Term Care

Good to Know The traditional approaches and challenges to managing long-term care costs are: Self-insurance — the risk of depleting savings (e.g., retirement portfolios), Buy insurance — sharply increasing premiums plus increasingly tight underwriting requirements, and Medicaid — poverty generally required to qualify. It’s been said that nature abhors a vacuum and it appears that…

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…

Passing the CFP Board Exam

CFP® Certificants in the News “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”…

No Additional Cost Services Exclusion

Course: Income Tax PlanningLesson 6: Employer-Sponsored Total Income Exclusions Student Question: For “No Additional Cost Services” provided by an employer, which are excluded from employee income, there is the requirement that no significant costs are incurred. How is “significant” cost determined? Significant sounds subjective. Is there a general rule for determining what is considered significant?…

Interest Rate Risk in a Bond

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…

Top 5 Reasons to Become a CFP® Professional

Good to Know There’s seldom been a better time to consider a career as a financial advisor, financial planner, or both. While the scope of this article prevents the author from discussing every reason why, here are the top 5. 1) Client Trust and Respect Expand Client Trust and Respect — According to Forbes, CFP®…

Chapter 13 Bankruptcy Means Test

Course: Estate PlanningLesson 13: Case Study Online Student Question: I am a little confused how one set amount – $100 – is the threshold for means testing a bankruptcy petitioner, when the amount of debt a borrower may owe can vary by large amounts. It would seem the amount left over (income minus allowable expenses)…

Current Ratio and Primary Residence

Course: Fundamentals of Financial PlanningLesson 3: Personal Financial Statements Student Question: What role does the client’s primary residence play in the current ratio calculation? Is their outstanding mortgage loan amount considered a liability? Instructor Response: That’s a great question. The residence is not considered a liquid asset and is excluded from “assets” for the current ratio. Only debt…

The FED’s 50 Basis Point Interest Rate Cut

CFP® Certificants in the News CFP Board’s most recent newsletter advises that the “Federal Reserve announced a significant 50 basis point rate cut, surprising many who anticipated a smaller 25 basis point reduction.” CFP Board Ambassador Kurt Whitesell, CFP® highlighted the opportunity for investors to lock in high rates on CDs before further interest rate drops.” …