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Student Question of the Week: Property Ownership
Student Question from EtebeCourse: Estate Planning Student Question: Good evening, #7 on the review question…why would four business associates with equal partnership be tenants in common? I thought it would be JTWROS as their interest is equal and undivided. Thanks. 7. An investment by four business associates, each wishing to contribute 25% of the purchase price. 100%…
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Student Question of the Week: Insurance Policy Dividends
Student Question from Margie LCourse: Insurance Planning Student Question: Insurance policy dividends may be taxable if they are paid in cash to the policy owner, but what about dividends that remain in the policy to purchase additional coverage (Paid-Up Additions)? Are those dividends non-taxable as long as the coverage is not lapsed or surrendered? Instructor Response:…
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Student Question of the Week: Net Present Value Calculation
Student Question from Greg CCourse: Fundamentals of Financial Planning Student Question: Hello! It seems to me that the loan proceeds in Question 3 should be positive cash flow entries in year zero, especially if their repayments are negative CFs in Year 5. Why is this not so? Thanks – Greg Question 3: Donald buys small houses…
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Student Question of the Week: Sources of Gift Tax Liability
Student Question from Ryan FCourse: Estate Planning Student Question: Hi Dan, I have a question about an estate planning concept. I think I’m just reading it wrong, but I want to make sure I have a clear understanding. What is the correct answer to this question, and why? A husband and wife wish to reduce the size…
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Student Question of the Week: Underinsured on Homeowners Insurance
Student Question from Mark PCourse: Insurance Planning Student Question: In the question below, if the ACV had been over $300,000, would she have received that amount? I know the correct answer is $281,250, but what if the ACV had been over $300,000? Jill owns a home that has a market value of $500,000, a replacement value…
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CFP® Practice Question: CFP Board’s Practice Standards
If a financial planner is unable to obtain all the relevant quantitative information and documents from the client needed to make recommendations, which of the following actions by the planner is acceptable under the CFP Board’s Practice Standards? (1) The planner may terminate the engagement. (2) The planner may limit the scope of the engagement.…
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Student Question of the Week: Insurance Contribution by Equal Shares
Student Question from Natalie PCourse: Insurance Planning Student Question: Hello! I am looking at question #2 that discusses the “contribution by equal shares” rule. However, I do not understand how they are getting the answer. 10% of $120,000 is $12,000 (not $25,000). Can you please explain? Thanks! Question 2 Three companies insure Josh’s $250,000 house. Insurer…
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CFP® Practice Question: How To Analyze A Buyout Offer
Mary and Penny were equal partners in the ownership of a gift shop but after several disagreements, have decided to terminate the partnership. Mary offers to purchase Penny’s interest by paying either $20,000 today or $35,000 five years from today. If Penny’s opportunity cost is 12% annually, which of the following options should Penny choose?…
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Student Question of the Week: QTIP Marital Trust
Student Question from Greg CCourse: Estate Tax Planning Student Question: Dan, The assets in a QTIP trust are automatically included in the surviving spouse’s estate, correct? Thanks, Greg Instructor Response: Hi Greg! Terminal interests are NOT normally included in the beneficiary’s estate. However, the IRS makes a special exception to “Qualify” (hence, QTIP for “Qualified” instead…
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