Questions of the Week

Course: Estate PlanningLesson 9: Income Taxation of Trusts and Estates Student Question: Can you refer me to a comparison (or just write a few notes) on how a grantor trust differs from a revocable trust and how a non-grantor trust differs from an irrevocable trust? They seem synonymous respectively to each other. Thank you!  Thanks…

Course: Retirement PlanningLesson 3: Employee Protections and Employer Responsibilities in Qualified Plans Student Question: I am confused as to how to get the correct answer for question number 4: Jackie invests her bonus at the beginning of this calendar year. If she earns 7% compounded monthly, what is the annual equivalent rate? Round your answer to…

Course: Retirement PlanningLesson 3: Employee Protections and Employer Responsibilities in Qualified Plans Student Question: I failed to understand how $11,600 would be the correct answer to the question below. Can you go through the actual calculation? Belinda Bigbux (age 40) earns $1,000,000 annually as a test pilot. She wishes to defer 10% of her compensation…

Course: Insurance PlanningLesson 17: Business Uses of Life Insurance Student Question: Do Buy-Sell Agreements account for projected growth of the company?  Do the life insurance benefits increase over time to account for projected growth, or perhaps can they invest and grow conservatively to keep up with inflation (or COLA on the plan)?  Thanks, Thomas Instructor…

Course: Insurance PlanningLesson 12: Types of Life Insurance Student Question: Could you help clarify the term “unused premiums” as it relates to term life insurance?  I guess I don’t see how you could have a premium not used in term life. Thanks, Michael Instructor Response: Hi Michael, Assume you pay $6,000 in annual prepaid premiums…

Course: Income Tax PlanningLesson 10: Recognition of Expenses, Losses, and Deductions Student Question: Question 5 (below) did not make sense to me. I started out by breaking down by year:   400,000 / 2,100,000 * 3,000,000 and so forth but did not arrive at the correct answer.  So, then I tried adding up 3 year: 400 +…

Course: Insurance PlanningLesson 6: Commercial Property and Liability Insurance Student Question: Can you please provide an example of contingent business interruption and extra expense insurance? Thanks, Laura Instructor Response: Hi Laura, Good question.  Here’s how contingent business interruption insurance might apply.  You own a nationwide chain of jewelry stores that specialize in gold/palladium alloys.  Your…

Course: Insurance PlanningLesson 10: Social Security Student Question: Does the maximum family benefit apply to a husband and wife that are both fully insured if the combined total between the two exceeds the maximum family limit?   If I understand correctly, the maximum family limit only applies if there are beneficiaries within the family receiving benefits…

Course: Insurance PlanningLesson 16: The Irrevocable Life Insurance Trust Student Question: Must Crummey Powers always be in effect to apply the annual gift tax exclusion in order to transfer to an irrevocable trust? Or is it the case that as long as it was done once, will all transfers be eligible for the annual gift tax exclusion? Thanks,…

Course: Estate PlanningLesson 13: Case Study Online Student Question: I am a little confused how one set amount – $100 – is the threshold for means testing a bankruptcy petitioner when the amount of debt a borrower may owe can vary by large amounts. It would seem the amount left over (income minus allowable expenses)…