Posts by Dan Madden, CFP®
Owner of a Grantor Trust
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…
Read MoreVested versus Contingent Beneficiary
Course: Estate PlanningLesson 3: Understanding Trusts and Trust Documents Student Question: In the example, I would think Northwestern would have a future, contingent interest, as their interest is dependent upon the death of the wife. But the feedback tells me it’s a vested interest. Do we assume death is inevitable, and therefore not a contingent-worthy…
Read MorePower of Attorney over Financial Affairs
Laura is concerned she will develop Alzheimer’s disease later in life similar to her mother. Which of the following documents should Laura execute to make sure her son is able to handle her financial affairs in the event she does develop Alzheimer’s disease? Durable springing power of attorney Nondurable springing power of attorney Durable nonspringing…
Read MoreCFP Board Elects Three New Directors
CFP® Board Updates On October 19, 2023, the CFP Board announced that its Board of Directors elected three new members: Malik Lee, CFP®, Linda Leitz, CFP® and Elisse Walter. The Board of Directors is the policymaking and oversight body of CFP Board of Standards and CFP Board Center for Financial Planning and acts on behalf…
Read MoreRefinance Payment Calculation
Lisa refinanced her home mortgage to a 30-year fixed mortgage with biweekly payments. How much is each payment if she owed $550,000 at the time of the refinance and the interest rate is 3.5%? $943 $1,139 $1,321 $1,453 CLICK TO REVEAL ANSWER Expand B is the answer. Lisa pays her mortgage every two weeks which…
Read MoreThe CFP Board releases updated demographics on CFP Professionals
CFP® Board Updates The CFP Board periodically updates the demographic makeup of the field of CFP® Professionals. It has long been important to the board that CFP® Professionals reflect our everyday society and our clients. A few key numbers that stick out: The total current number of CFP® Professionals is 97,575 Males make up 76.3%…
Read MoreCalculating Gross Income from Various Sources
A client received an annual salary from his employment of $30,000. He was a 50% owner of both a C corporation and an S corporation. The C corporation had net profits of $24,000, and the S corporation had income of $17,000. Neither corporation made a distribution. The client’s revocable trust had income of $15,000 but…
Read MoreDefined Benefit Plan Reversion Tax
Lucky Star Corp has been extremely lucky with their defined benefit plan as it is currently overfunded. Management decided to terminate the plan while they are overfunded and share the excess with the employees. What amount of reversion tax will Lucky Star Corp have to pay upon termination? 0% 10% 20% 50% CLICK TO REVEAL…
Read MoreSection 303 Redemption
A Sec. 303 redemption is most likely appropriate for which of the following estates? At Fred’s death, Fred owned all of his assets including the stock of a closely-held corporation in joint tenancy WROS with his wife. Before Gloria’s death, she transferred all of her assets including the stock in a closely-held corporation to an…
Read MoreCalculating Realized Compound Yield on a Bond
An investor bought a bond at par that matures in 15 years. The bond pays an annual coupon of $130 and the reinvestment rate is 9%. What is the realized compound yield of this bond? 11.05% 12.55% 13.00% 14.10% CLICK TO REVEAL ANSWER Expand A is the answer. One would anticipate a realized compound yield…
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