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 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$1 million gift to Center for Financial Planning
CFP® Board Updates The CFP Board Center for Financial Planning seeks to create a more diverse and sustainable financial planning profession. The center addresses profession-wide challenges in the areas of diversity and workforce development by bringing together industry professionals, educators, firms, and experts to collaborate and conduct and publish research in these areas. On August…
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 MoreRetirement Funding Calculation
Erika wants $50,000 a year in today’s dollars in retirement. She anticipates retiring in 10 years and living in retirement for 30 years. Erika can earn 7% on her investments and she expects inflation to average 4%. Approximately how much should Erika have saved by the day she retires to meet this goal? $913,000 $983,000…
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 More