Posts by Dan Madden, CFP®
Annual Exclusion Gifts
In 2026, Robert wishes to maximize annual exclusion gifts without using any of his lifetime gift and estate tax exemption. He gives: $19,000 to his son $19,000 to his daughter $19,000 to each of his three grandchildren How much has Robert transferred free of gift tax and without using any of his lifetime exemption? $57,000…
Read MoreValue of Life Insurance in Buy-Sell Agreements
Course: Insurance PlanningLesson 17: Business Uses of Life Insurance Student Question: Hi, 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)? Thank…
Read MorePortfolio Development and Analysis
A CFP® professional is reviewing a client’s investment portfolio. The client has the following accounts: Traditional IRA Roth IRA Taxable brokerage account Which of the following assets is generally MOST appropriate to hold in the Roth IRA? Municipal bonds A money market fund A diversified stock mutual fund expected to experience significant long-term appreciation Short-term…
Read MoreDeductible Mortgage Interest
Course: Income Tax PlanningLesson 8: Arriving at Taxable Income Student Question: Hi, If a client has a $250k mortgage on a home worth $500k and they refinance to take equity out of their home, say $100k. Then they use that $100k to purchase a vacation home worth $300k (so they now have $450k in mortgage…
Read MoreRMD Strategy
Evelyn, age 76, must take a required minimum distribution (RMD) of $40,000 from her traditional IRA in 2026. She does not need the income and plans to donate $25,000 to a qualified charity. Which of the following strategies would MOST effectively reduce Evelyn’s adjusted gross income (AGI)? Take the full RMD and then claim a…
Read MoreCorporate Bonds in the Marketplace
Course: Investment PlanningLesson 9: Fixed Income Securities Student Question: Hi, Just a question about Corporate Bond Funds. Gathering my information from the book, it seems they are “debt notes” insured to keep the company going. If they are not repaid the person who accepted the “bonds” can sometimes take assets in the company, like equipment…
Read MoreNet Investment Income
In 2026, a married couple filing jointly has modified adjusted gross income (MAGI) of $320,000, including $40,000 of net investment income. Assuming no other limitations apply, how much of their net investment income is subject to the 3.8% Net Investment Income Tax (NIIT)? The NIIT threshold in 2026 is $250,000. $0 $20,000 $40,000 $70,000 CLICK…
Read MoreIntegration with Social Security Definition
Course: Retirement PlanningLesson 5: Leveraging Nonqualifed Plans for Small Businesses and Not-For-Profit Employees and Owners Student Question: I’ve seen the phrase “plan formula can be integrated with social security” many times, but I don’t really know what this means. Can you explain how that works or is it beyond the scope of what we need…
Read MoreRevocable Trusts
Which of the following statements regarding a revocable living trust is CORRECT? Assets transferred to the trust are removed from the grantor’s taxable estate The trust provides income tax-free growth during the grantor’s lifetime The grantor retains control over trust assets and may amend the trust The trust avoids gift tax reporting because it is…
Read MoreLump-Sum vs Annuity Distributions Considerations
Course: Retirement PlanningLesson 7: Income Distribution Planning for Qualified Plans Student Question: In the discussion as to whether a lump-sum distribution would be appropriate instead of periodic or annuity payments, one of the issues in making that decision is “The Size of the Distribution.” I’m not really understanding what is meant by this statement, “The…
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