Dan Madden, CFP® – Page 42 – Online CFP Program

CFP Board Registered Programs Conference Goes Virtual

CFP Board Updates The CFP Board recently announced the 2020 Registered Programs Conference will be held virtually this year on December 15 and 16, 2020. The conference provides the opportunity for approved educational programs to receive valuable updates from the Board, as well as connect with colleagues and the Board. To learn more about the…

Calculating Education Need

Nancy recently received $250,000 from her mother’s life insurance policy. She wants to use a portion of the money to fund her son’s college education that currently costs $10,000 a year and she anticipates an 8% yearly increase. Nancy can earn 7% on her investments and the overall inflation rate is 3%. Nancy’s son will…

Accelerated Death Benefits

Which of the following individuals would typically qualify for accelerated death benefits under their term life insurance policy? Ida, who is expected to die within 7 months from cancer Jacob, who is expected to die within 10 months from AIDS Kay, who is expected to die within 3 months from kidney failure All of the…

Vested 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 contingency? EXAMPLE: During the life of…

Various Sources of Income

A client received an annual salary from his employment of $40,000. He was a 50% owner of both a C Corporation and an S Corporation. The C Corporation had net profits of $20,000 and the S Corporation had income of $10,000. Neither corporation made a distribution. The client’s revocable trust had income of $5,000 but…

Skip Persons and the Generation-Skipping Transfer Tax

Course: Estate PlanningLesson 7: Transfer Taxation IV – Generation-Skipping Transfers Student Question: Regarding the example below, would the death of the father Stephen not move Andrew one step up, making him only one generation below Mrs. Jones? Would this not remove the Generation-Skipping Transfer Tax? EXAMPLE: Upon her death, Mrs. Jones left her estate in trust to provide income for life to…

Possible Penalties on Tax Return

Terry received a notice from the IRS correcting a math error on his individual income tax return. As a result, Terry owes $1,000 in taxes, penalties and interest. Which of the following is the most likely penalty or interest assessed against Terry? Understatement penalty Failure to file penalty Fraud penalty Underpayment penalty CLICK TO REVEAL…

Pre- and Post-1987 After-Tax 401(k) Contributions

Course: Retirement PlanningLesson 7: Income Distribution Planning for Qualified Plans Student Question: Regarding the after-tax example: Wouldn’t the full $10,000 hardship come first from the $80,000 that was contributed pre-1987? Don’t you exhaust the $80,000 before concerning yourself with the exclusion ratio? From the Course: Once the pre-1987 after-tax contributions have been withdrawn, or if none existed, all other after-tax contributions are withdrawn on…

Defining an Insurance Contract

Olivia is a 25-year-old single mother with twin girls who just turned three. Olivia has worked for the last 5 years as an administrative assistant for a local law firm. Olivia’s firm provides her with a basic medical insurance policy and a split definition disability. Which of the following is the biggest risk exposure for…

Defining an Insurance Contract

Which of the following statements concerning insurance contracts is not correct? An insurance contract is bilateral because both the insurer and the insured make legally enforceable promises. In an insurance contract, the insurer has made legally enforceable promises for which it can be sued for breach of contract. Because property insurance contracts are personal, it…