Questions of the Week

Course: Fundamentals of Financial PlanningLesson 9: CFP Board Regulatory Requirements Student Question: In Lesson 1, for Step 7, I have that a certificant is responsible for monitoring and updating only if explicitly called for in the scope of the engagement.  In Lesson 9, I’m reading that the certificant is responsible unless explicitly excluded. Which is…

Course: Investment PlanningLesson 15: Fundamentals of Derivatives – Futures and Options Student Question: Can you please explain what Basis points are and how/why they are generally used? Thanks Lana Instructor Response: Hi Lana, There are 100 basis points in 1%.  Basis points are merely a common method of measuring investment fees or returns.   An exchanged-traded fund may charge…

Course:  Income Tax PlanningLesson 15: Property Transactions Student Question: Dear Greene Consulting Team –  In the lesson, deducting donations of “cash” versus “long term appreciated securities” are differentiated. I’m curious about “short-term appreciated securities”.  In other words, if I own a stock – bought at $10,000 and it’s worth $50,000 when I donate, but I’ve only owned it 6 months…

Course:  Estate PlanningLesson 4: Transfer Taxation I – Common Elements of Estate and Gift Taxes Student Question: Hello, Can I get some clarification on the Gift and Estate tax? As I understand it, individuals can gift up to $15,000 per year without “triggering” a gift tax; however, they still have the lifetime exemption of $11.58 million. Gifts over $15,000 per…

Course:  Estate PlanningLesson 3: Understanding Trusts and Trust Documents Student Question: In the example, I would think Northwestern would have a future, contingent interest as their interest is dependent upon the death of the wife. But the feedback tells me it’s a vested interest. Do we assume death is inevitable and, therefore, not a contingent-worthy contingency? EXAMPLE: During the life of…

Course:  Estate PlanningLesson 7: Transfer Taxation IV – Generation-Skipping Transfers Student Question: Regarding the example below, would the death of the father Stephen not move Andrew one step up, making him only one generation below Mrs. Jones? Would this not remove the Generation-Skipping Transfer Tax? EXAMPLE: Upon her death, Mrs. Jones left her estate in trust to provide income for life to…

Course:  Retirement PlanningLesson 7: Income Distribution Planning for Qualified Plans Student Question: Regarding the after-tax example: Wouldn’t the full $10,000 hardship come first from the $80,000 that was contributed pre-1987? Don’t you exhaust the $80,000 before concerning yourself with the exclusion ratio? From the Course: Once the pre-1987 after-tax contributions have been withdrawn, or if none existed, all other after-tax contributions are withdrawn on…

Course:  Insurance PlanningLesson 4: Homeowners Insurance Student Question: Is there a definition for personal injury as noted under the personal injury endorsement? FROM LESSON: The personal injury endorsement expands the Section II liability coverage to include “personal injury” and “bodily harm, sickness or disease.” How does this vary from bodily injury that is covered without an endorsement? Thanks. Matthew Instructor…

Course:  Income Tax PlanningLesson 14: Tax Credits, Payments, and Forms Student Question: Is the statement correct on this page that “The dependent must be at least 17 years of age” and “other than a taxpayer’s child” for the Other Dependent Credit? From the Coursework: The Other Dependent Credit is a $500 nonrefundable credit for dependents other than a taxpayer’s child. The dependent…

Course:  Retirement PlanningLesson 1: Using IRAs to Build and Distribute More Retirement Income Student Question: Hi I was doing a little further reading on the new IRA distribution rules and wanted to see if “conduit” or “accumulation” trust rules will be necessary information for the exam? As I understand it, trusts as beneficiaries are held to the “five-year rule” or the “payout rule” depending on…