Posts by Dan Madden, CFP®

Student Question from: SteveCourse:  Estate Planning – Contingent versus Vested Beneficiary Student Question: Hi Dan, I am a bit confused as to why in the example “Northwestern University” and “my son” are not considered having a future “contingent” interest in the trust since they do not receive the interest until the wife, Jane Gold dies.…

Student Question from: Bill M.Course:  Insurance – Replacement Cost Student Question: I don’t understand Question 2. Why does the client have 97.2% of the coverage he needs? Doesn’t he have $14,000,000 in coverage? I thought he just had 77.7% of the required coverage. Where am I messing up? Peter purchased an apartment building for $15,000,000…

Student Question from: Ben H.Course:  Investments – Bonds and Interest Rate Relationship Student Question: From mid contraction to trough in the business cycle cycle, why do bonds do well? I don’t understand the relationship between bonds value going up if interest rates are going down? Please help. Thanks Instructor Response: Hi Ben! Your question brought…

Student Question from: Harry F.Course:  Estate Planning – Taxation of Trusts and Estates Student Question: In the statement below, regarding complex trusts, it states, “If income from the trust is distributed, it is taxed to the beneficiary; if accumulated, the tax is paid by the trust.”  So, would double taxation occur if a trust accumulates…

Student Question from: Shannon P.Course:  Fundamentals of Financial Planning – Economic Concepts Student Question: I need a better understanding of the relationship between supply and demand, in particular the equilibrium price. Instructor Response: Hi Shannon! The short of it is that the equilibrium price is the point at which the demand for a good meets…

Student Question from: David L.Course:  Fundamentals of Financial Planning – Using the Calculator Student Question: Dan – I’m not understanding Question #4. Why is 1 used as the present value? And then why 1 x 12?  From the Lesson:  4. Jackie invests her bonus at the beginning of this calendar year. If she earns 7%…

Student Question from: SteveCourse:  Retirement Planning – SEP Employer Contributions Student Question: Dan, should the second paragraph below say, “…the lesser of 100% of covered compensation…”, and NOT 25%?  Thanks!    While the funding amount can be at the sponsor’s discretion, the actual contribution structure is inflexible and is generally a uniform percentage of compensation. …

Student Question from: Natalia G.Course:  Retirement Planning – Characteristics of ESOPs Student Question: Quick question – under “Recognition deferral” paragraph (below in bold), it is stated that ESOP plan participants can “defer recognition of a portion of their gains when employer securities are distributed at retirement. Participants are generally eligible to delay recognition of gain…

Student Question from: Amanda S.Course:  Income Tax – Code Section 179 Student Question: Hi there! Can you explain more about the second bullet in the blue box (shown below) regarding the $560k excess and how it works? I think I understand the first scenario in the example: $560k – $139k allowed for immediate expense =…

Student Question from: John C.Course:  Income Tax – Childcare Credit Student Question: I have a quick question about review exercise number 3 (below).  It indicates that $2,100 would be the correct answer.  I thought $6,000 was the maximum for two children?  Are you perhaps asking for the minimum instead, or should we have assumed some…