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Liability Legal Defense Costs
Course: Insurance PlanningLesson 2: Insurance Planning Student Question: Are the defense fees in a liability case charged against the total liability that an insured carries? For example, I have a $100,000 liability policy. I have to pay $80,000 to the injured party. Legal fees on my behalf are $50,000. Am I going to be out of pocket…
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Taxpayer Penalty
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…
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4 Ways to Afford Long-Term Care Insurance
How can the average American afford Long-Term Care insurance (LTCi)? Before we answer that question, let’s refresh our memory on the strategic use of LTCi. In our previous blog, we identified the following strategies to manage long-term care costs: Self-insure If you can comfortably afford catastrophic (e.g., dementia) long-term care costs of as much as…
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Unused Premium
Course: Insurance PlanningLesson 8: Gift and Estate Valuation Student Question: Could you please clarify for me what the unused premium would be in term life insurance? I don’t quite understand how you could not use the premium. Thanks. John Instructor Response: Hey John- Certainly. A lot of different terms in insurance, to be sure. Assume…
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Accrual Basis Reporting
Acme Financial Services, Inc., an accrual basis taxpayer, was paid $3,000 in March for tax planning services it performed for Ed Snow. In July, Snow informed Acme that the services were not performed satisfactorily and that he wanted his money back. The dispute was not resolved before the end of the year. Early in the…
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CFP® Professionals and Recession Preparedness
While pundits have predicted a recession that has yet to happen for several years, clients do worry about the impact to their finances if a recession occurs. According to a recent survey by CFP Board, CFP® professionals and other financial advisors make a difference in client confidence when facing recession concerns. According to the survey,…
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Incontestability Period
Course: Insurance PlanningLesson 2: Fundamentals of Insurance Student Question: For the question below, the answer was #3. Susan died yesterday, exactly ten years after a life insurance policy on her life was issued to her. The policy was in effect at her death. She understated her age on the initial policy application and the underwriter…
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Joint Tenant Transfer
Reginald Rich owns a parcel of commercial real estate worth $500,000. He has an estate valued at $5 million. He has a son, age 25, by his first marriage and two daughters by his present wife. Mr. Rich would like to see his son receive the real estate but does not want his present wife…
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CFP® Certificants in the News: Are You Committing Financial Planning?
CFP® Certificant in the News A CFP® Certificant is subject to a greater duty, the duty to adhere to the Practice Standards, to clients when providing Financial Planning vs. when providing Financial Advice. As we will see in just a moment, a Certificant may be subject to the Practice Standards based upon what the client…
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