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CFP® Practice Question: Understanding Portability
In giving a talk to a small audience on the topic of estate planning, someone asks you, as a financial planner, to provide some clarifying comments regarding the recent portability of the Applicable Exclusion Amount between spouses. You would be correct in making any of the following comments EXCEPT: While the 2012 Tax Relief Act…
Student Question of the Week: Adjusted Basis in Property – An Example
Student Question from: Susan M.Course: Income Tax Student Question: On Question 2 – Why are we adding the $2,500 security in as a capital addition when it does not lengthen the life of the building? By definition, doesn’t it have to extend the life of the asset by at least 1 year? 2. Madden Incorporated…
Good to Know: CFP® Practitioner Updates
A financial planner’s work is never done. The administration’s proposed 2014 budget takes aim squarely at the “permanent” estate tax reforms passed in January 2013. The current $5,250,000 estate tax exemption would plummet $1,750,000 to only $3,500,000. The estate tax rate would jump to 45% from the current 40%. But that’s not all. The proposal…
Student Question of the Week: 529 Contributions – Can I Contribute Stock?
Student Question from: Vincent C.Course: Fundamentals – Education Planning Student Question: For the basic rule of only using cash contributions for 529 Plans, can you roll over appreciated stocks from UTMA/UGMA and ESA? If so, do you have any taxable event tied to the rollover of stocks (if an unrealized gain exists)? Instructor Response: Hi…
Student Question of the Week: Grantor Trusts – What are They Good For?
Student Question from: Harry F.Course: Estate Planning Student Question: Dan, given the information on this page, why do Grantor Trusts exist? What purpose do they serve? Grantor Trusts A Grantor Trust is a trust in which the grantor, due to retained control over the income and/or corpus of the trust, is treated as the owner of…
Student Question of the Week: Basis in Property Transactions
Student Question from: Katy U.Course: Income Tax Student Question: On the adjusted basis portion in the question below – why is the $25,000 not included? Isn’t that a commission? I thought you are supposed to include the commission or other similar costs. Nick purchased an office building in Year 1 for $150,000 and sold it…
CFP® Practice Question of the Week: Saving for a Future Purchase
Al wants to purchase a lake house in 20 years when he retires. The house currently costs $450,000 and inflation is 4%. As his certified financial planner, Al asks for your guidance in identifying how much he should save at the beginning of each year to accomplish his goal of purchasing the house with cash…
Student Question of the Week: Estate Planning – 3-Year Rule
Student Question from: SteveCourse: Estate Planning Student Question: Hello Dan, The topic of “Transfers within three years of death” has been very confusing to me. My attempts to research this further on the Internet makes it even more confusing because of either incomplete or flat out incorrect information being provided. It seems that a lot…
CFP Board Update: Tips for Passing the CFP® Exam
The CFP® Exam continues to evolve from the topic-based rubric of the past. Prior exams were built from a pre-set mix of questions from Fundamentals, Risk Management, Investments, Income Tax, Retirement, and Estate Planning. The CFP® Exam now focuses on eight “Job Task Domains.” Six domains mirror the six steps in the financial planning process while Communications…