Posts by Dan Madden, CFP®
Reducing the AMT
Which of the following tax planning ideas would help Beth the most if she currently has to pay AMT taxes? Pay her $1,000 January mortgage payment before the end of the year. Pay her $2,000 January alimony payment to her ex-husband before the end of the year. Recognize a $3,000 short term capital gain on…
Read MoreSeptember 2021 CFP Board Newsletter
CFP® Board Updates The CFP Board periodically releases a newsletter summarizing recent updates, changes, and news. The September 16, 2021 edition includes: Survey of CFP® Professionals Shows Continued High Satisfaction with Career Choice, CFP® Certification CFP Board Requests Comments on Proposed Revisions to Sanction Guidelines and Procedural Rules by September 21 CFP Board Imposes Sanctions…
Read MoreSelecting an Appropriate Trust
Which of the following trusts should Jason establish in his Will to provide for his son Gaven’s living expenses until Gaven reaches age 65 if Gaven is currently a 30-year old unemployed aspiring actor? 2503(b) trust 2503(c) trust Crummey trust Totten trust CLICK TO REVEAL ANSWER Expand A is the answer. The 2503(b) trust would…
Read MoreCalculating Rate of Return
Course: Investment PlanningLesson 1: Key Principles of Investing Student Question: Hey Dan, Hope you are doing well. Can you help solve a practice question? I looked through the textbook and my notes, and just couldn’t wrap my brain about how to solve the problem below. The confusing part to me is that the fund was not…
Read MoreOwner 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 MoreCFP Board Encourages Pro Bono
CFP® Board Updates Pro Bono is typically thought of as something attorneys provide. While the work attorneys do to help those in difficult legal situations without access to competent support, it’s just as important that those in financial services provide a similar benefit when possible. If you’re a CFP® Professional with a desire to help…
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 MoreCharacteristics of a Will
Which of the following statements concerning a Will are correct? A will can be altered, amended, or completely rewritten at any time before a person’s death. A will cannot be rewritten but can be amended at any time by a codicil. A will must be signed by the maker and usually must be witnessed by…
Read MoreUnderinsured Dwelling
Frank carries an H0-3 policy with $400,000 of coverage and a $1,000 deductible. It would cost $600,000 to rebuild Frank’s house. How much will his insurance company pay on a $100,000 claim related to a fire that started in Frank’s kitchen? $79,000 $82,333 $83,333 $99,000 CLICK TO REVEAL ANSWER Expand B is the answer. Frank…
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…
Read More