Details

Essentials of Personal Financial Planning


Essentials of Personal Financial Planning


AICPA 1. Aufl.

von: Susan M. Tillery, Thomas N. Tillery

114,99 €

Verlag: Wiley
Format: EPUB
Veröffentl.: 21.09.2018
ISBN/EAN: 9781119421207
Sprache: englisch
Anzahl Seiten: 456

DRM-geschütztes eBook, Sie benötigen z.B. Adobe Digital Editions und eine Adobe ID zum Lesen.

Beschreibungen

ESSENTIALS OF PERSONAL FINANCIAL PLANNING Essentials of Personal Financial Planning was written to challenge the status quo by promoting personal financial planning (PFP) as a profession, not as a sales tool to gather assets under management or facilitate sales of insurance products. The book takes a comprehensive and integrated approach to PFP for accounting students, allowing them to view the profession through the lens of a CPA – with integrity and objectivity. This book systematically introduces the essentials of all the major PFP topics (estate, retirement, investments, insurance, and tax), as well as: The PFP process, concepts and regulatory environment. Professional responsibilities of a CPA personal financial planner and the requirements of the Statement on Standards in PFP Services. Time value of money concepts. The book then builds on these foundational concepts, showing their interconnectivity and professional opportunities, to provide a deeper understanding of PFP and its application. After reading this book, students will be able to apply the knowledge and skills gained from this course to have an immediate and long-term positive impact for themselves and for the clients they serve.
Introduction xiii Chapter 1: Personal Financial Planning 1 Introduction 2 Phases of the Personal Financial Planning Engagement 2 Engage 3 Discover 4 Analyze 5 Recommend 5 Expanded or Additional Engagements 6 Behavioral and Psychological Methods of Building Client Rapport 8 Active Listening 8 Behavioral Biases and Heuristics 9 Socratic Questioning 9 Application of Behavioral Techniques to Client Relationships 10 Gathering Data: Quantitative Versus Qualitative Data 12 Quantitative Data 12 Qualitative Data 13 Risk Tolerance 14 Life Planning and the Personal Financial Planning Process 14 Chapter Review 16 Chapter 2: The Statement on Standards in Personal Financial Planning Services No. 1 19 Introduction 20 The Pathway to Standards in PFP 21 A Timeline of Personal Financial Planning in the United States 21 Statement on Standards in Personal Financial Planning Services 23 Personal Financial Planning Services 24 Applicability 26 Requirements of the Member 27 Steps in a Personal Financial Planning Engagement 27 Planning the PFP Engagement 27 Selecting Other Service Providers 28 Obtaining and Analyzing Information 28 Developing and Communicating PFP Recommendations 29 Other Types of Personal Financial Planning Engagements 29 Implementation Engagement 29 Monitoring Engagement 30 Updating Engagement 30 Chapter Review 30 Chapter 3: Time Value of Money Concepts 35 Introduction 36 Tools for Calculating Time Value of Money 36 Efficiency 37 Establishing Realistic Expectations 37 Fundamental Time Value of Money Functions 38 Present Value 39 Periods (n) 39 Interest (i) 40 Payment (PMT) 41 Future Value (FV) 42 Mode 42 Examples 43 Unequal Cash Flows 46 Present Value 47 Net Present Value 48 Internal Rate of Return 48 Serial Payments 48 Examples 49 Chapter Review 52 Chapter 4: Fundamentals of Personal Financial Planning 57 Introduction 58 Personal Financial Planning Assumptions 58 Personal Statement of Financial Position 60 Spending Plan 62 Financial Ratios 65 Debt-to-Income Ratio 65 PITI Ratio 66 Savings Ratio 66 Emergency Fund 69 Financing Strategies 69 Automobile Purchase or Lease 70 Home: Purchase or Rent 70 Bankruptcy 74 Consumer Protection Issues 74 The Fair Credit Reporting Act and Identity Theft 74 Electronic Fund Transfer Act 75 Fair Credit Reporting Laws 75 Chapter Review 76 Chapter 5: Estate Planning Basics 79 Introduction 80 Fundamentals of Estate Planning 80 The Unified Tax System 81 Generation Skipping Transfer Tax 81 Credits, Deductions, and Other Tax Reductions 81 Step Up In Basis 83 Probate and Intestacy 83 Expatriate Issues 84 Impact of Property Ownership and Beneficiary Designations 84 Community Property and Common Law 84 Basic Estate Planning 85 Data Gathering 86 State Estate Tax 87 Estate Tax Filing Requirements 87 Gross Estate 88 Adjusted Gross Estate 88 Prior Transfer Credit 88 Sources for Estate Liquidity 89 Estate Planning Documents 89 Wills 89 Powers of Attorney 90 Advance Medical Directives 90 Beneficiary Forms 91 Trusts 91 Crummey Power 92 Testamentary Trust 92 Powers of Appointment 92 Chapter Review 93 Chapter 6: Charitable Gift Planning Basics 97 Introduction 98 What is a Charity? 98 Types of Gifts 99 Real Estate 100 Personal Property 100 Charitable Trusts and Planning Tools 101 Charitable Lead Trust 101 Charitable Remainder Trust 102 Wealth Replacement Trust 104 Pooled Income Fund 104 Other Charitable Vehicles 104 Taxation and Income Tax Planning 105 Application of Limitations 105 Carryovers of Excess Charitable Contributions 106 Tax Impacts of Transfers 107 Qualified Charitable Distributions 108 Chapter Review 109 Chapter 7: Principles of Risk and Insurance 113 Introduction 114 Risk Management Concepts 114 Risk 114 Peril and Hazard 115 The Law of Large Numbers and Adverse Selection 115 Self-Insurance 116 Managing Risk 116 Controlling Risk 116 Financing Risk 117 The Risk Management Process 117 Risk Management Matrix 118 Insurance Policy and Company Selection 119 Types of Insurance 120 Life/Health/Disability 121 Property Risk and Insurance 121 Legal Aspects of Insurance 123 Offer and Acceptance 123 Adequate Considerations 124 Competent Parties 124 Legal Purpose 124 Legal Form 124 Chapter Review 125 Chapter 8: Insurance Planning Basics, Part I 129 Introduction 130 Life Insurance 130 Life Insurance Types 131 Term Life Insurance 132 Permanent Life Insurance 132 Additional Life Insurance Policy Considerations 134 Contractual Provisions of Life Insurance 134 Riders 135 Nonforfeiture Options 136 Settlement Options 137 Advanced Death Benefits 138 Health Insurance 139 Hospital, Surgical, and Physician’s Expense Insurance Plans 139 Managed Care Plans 140 Medicare (Parts A, B and D) 141 Medicare Supplement Insurance (MEDIGAP) 142 Medicare Advantage Plan (Part C) 142 Medicaid 142 Tricare 143 Health Savings Accounts and Other Tax-Favored Health Plans 143 Health Savings Accounts (HSA) 143 Health Flexible Spending Arrangements (FSA) 144 Health Reimbursement Arrangements (HRA) 144 Chapter Review 144 Chapter 9: Insurance Planning Basics, Part II 149 Introduction 150 Annuities 150 Deferred Fixed, Variable, or Equity-Indexed Annuity 150 Taxation 151 Payment Options 151 Disability Insurance 152 Own Occupation Versus any Occupation 152 Continuance Provisions 153 Additional Provisions 154 Long-term Care Insurance 155 Qualified Care 155 Taxation and Income Tax Planning 156 Medicare Limitations 156 Property and Casualty Insurance 157 Homeowners Insurance 157 Personal Auto Insurance 161 Umbrella Liability Insurance 164 Chapter Review 164 Chapter 10: Investment Basics 169 Introduction 170 Securities Defined 170 The Role of the Personal Financial Planner and Compensation 170 Business Models 172 Broker-Dealer Model 172 Registered Investment Adviser (RIA) Model 172 Dual-License Model 173 CPA Disclosure Requirements 173 The Investment Planning Process 174 The Planning Phase 174 Determine and Prioritize Client’s Specific Financial Goals 175 Client’s Financial Condition 175 Assessing Risk Tolerance 175 Identify Unique Needs 176 Identify Potential Client Investment Constraints 177 Chapter Review 178 Chapter 11: Investment Planning 181 Introduction 182 Capital Markets 182 Types of Investment Vehicles 183 Cash and Cash Equivalents 183 Guaranteed Investment Contract 185 Bond 185 Stock 190 Mutual Fund 190 Exchange Traded Fund 191 Real Estate 192 Alternative Investments 192 Investment Valuation 193 Investment Strategies 194 Market Timing 194 Dollar-Cost Averaging 194 Systematic Withdrawal Plan 195 Bond Ladder 195 Option Strategies 195 Short Selling 195 Margin Account 196 Chapter Review 197 Chapter 12: Planning for Retirement and Financial Independence 199 Introduction 200 PFP Assumptions for Financial Independence 201 Inflation 201 Life Expectancy 202 Financial Independence Spending Plan 203 Modeling Techniques 204 Investment Returns 204 Income Sources 205 Time Value of Money and Inflation-Adjusted Return 208 Mini Case Study 208 Chapter Review 210 Chapter 13: Planning Vehicles for Retirement 215 Introduction 216 Social Security Benefits 216 Eligibility and Benefits 217 Spousal Benefits 218 Working After Retirement 218 Taxation of Benefits 219 Government Pension Offset 219 Railroad Employees 219 Employer-Sponsored Retirement Plans 219 ERISA: Overview of Qualified Plan Rules 221 Vesting 223 Defined Benefit Plans 224 Defined Contribution Plans 226 Other Retirement Plans 232 Additional Employer-Sponsored Retirement Plans 234 Individual Retirement Accounts 234 Spousal IRA 235 Nondeductible IRA 235 Roth IRA 235 Roth IRA Conversions 236 Chapter Review 236 Chapter 14: Elder Planning Basics 239 Introduction 240 Nonfinancial Factors 240 Types of Care 241 Communicating with Cognitively Impaired Clients 242 Incapacity and Incompetency 242 Financial Decisions 243 Financial Fraud 243 Housing Decisions 244 Health Care Options 245 Government Programs 245 Veterans Benefits 247 Funding Sources for Elder Care 248 Taxation and Income Tax Planning 250 Filing a Tax Return 250 Medical Expenses 250 Home Care 251 Long-Term Care 251 Integration and Application of Elder Planning with Personal Financial Planning 251 Estate Planning 251 Advance Directives 252 Health Care Proxy 252 Power of Attorney and Durable Power of Attorney 252 Chapter Review 254 Chapter 15: Education Planning Basics 257 Introduction 258 Funding Methods 258 Qualified Tuition Programs (529 Plans) 258 Coverdell Education Savings Accounts 260 Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) 261 Education Savings Bond Program 261 Financial Aid 262 Federal Student Aid 262 Scholarships 264 Loans 264 Taxation and Income Tax Planning 265 Taxation of Scholarships and Grants 265 Credits 265 Deductions 266 Educational Assistance Program 267 Integratuion and Application of Education Planning with PFP 267 Risk Management and Insurance Planning 267 Retirement Planning 267 Estate Planning 268 Investment Planning 268 Education Needs Analysis Case Study 268 Step One—Calculate the Future Value of One-Third of the Cost of College 269 Step Two—Calculate the Present Value of the Serial Payments Need to Fund College 269 Step Three—Calculate the Total Amount Needed 270 Chapter Review 270 Chapter 16: Applications in Estate Planning 273 Introduction 274 Trusts Revisited 274 Credit Shelter Trust 274 Marital Trust 275 Qualified Terminable Interest Property Trust 275 Disclaimer Trust 275 Additional Trust Types 276 Gifting Strategies 277 Interest-Free Loans 277 Installment Sales to Family Members 277 Self-Cancelling Installment Note 278 Additional Tax Issues 278 Generation-Skipping Transfer (GST) Tax 278 Income in Respect of the Decedent 279 Closely Held Business Issues 280 Special Valuation Under Section 2032(A) Farm and Real Estate 280 Section 6166 Deferrals of Estate Tax 280 Buy-Sell Agreement 281 Section 303 Redemption 282 Other Estate Planning Considerations 283 Qualified Domestic Trust 283 Planning for Blended Family Relationships 283 Cohabitation 284 Integration and Application of Estate Planning with PFP 284 Life Insurance 284 Retirement Planning 285 Private Foundation 285 Chapter Review 285 Chapter 17: Applications in Risk Management 289 Introduction 290 Life Insurance Applications 290 Life Insurance Illustrations 290 Settlements 291 Modified Endowment Contracts 293 Transfer for Value Rules, Section 101(A)(2) 293 Section 1035 Exchanges 294 Impact on Other Aspects of Personal Financial Planning 294 Annuities 296 Medical Insurance 296 Taxation and Income Tax Planning 296 Affordable Care Act 297 Healthcare Marketplace—Individual and Small Employer 298 Premium Tax Credits 298 Individual Shared Responsibility Provision 298 Employer Shared Responsibility Provision 298 Disability Insurance 299 Long-term Care Insurance 299 Taxation and Income Tax Planning 299 Retaining the Risk—The Self-Insurance Option 300 Integration and Application of Long-Term Care Insurance with Personal Financial Planning 301 Property and Casualty Insurance 301 Additional Insured Endorsement 301 Taxation and Income Tax Planning 302 Business Owners Insurance 302 Chapter Review 303 Chapter 18: Applications in Investment Planning 307 Introduction 308 Perform Financial Analysis 308 Investment Risk 308 Taxation and Income Tax Planning 309 Assess Impact of Constraints 309 Asset Class Allocation Strategy 310 The Investment Policy Statement 310 The Monitoring and Updating Phase 315 Measuring Performance and Goal Achievement 316 Reevaluation of the IPS 317 Integration and Application of Investment Planning with PFP 317 Risk Management and Insurance Planning 317 Planning for Financial Independence 318 Estate Planning 318 Charitable Planning 318 Chapter Review 319 Chapter 19: Applications in Planning for Retirement 323 Introduction 324 Employer Considerations 324 Contribution Limits 325 Defined Benefit Plans 325 Defined Contribution Plans 327 Retirement Distribution Optimization Planning (Income Management) 328 Avoiding Early Withdrawal Penalties 329 Employer Stock and Net Unrealized Appreciation (NUA) 330 Required Beginning Dates and Minimum Distributions 332 Annuity Options 333 Lump-Sum Distributions 334 Qualified Domestic Relations Order 335 Income Tax Issues 336 Incorporating Tax Rate Diversification in the Choice of Retirement Savings Vehicles 336 Impact of Tax-Loss Harvesting in the Retirement Planning Process 336 Investment Management During Retirement 338 Withdrawal Rates 339 Asset Allocation 339 Integration and Application of Retirement Planning in the PFP Process 340 Life Expectancy 340 Asset Protection 340 Chapter Review 341 Chapter 20: Applications in Employee Benefits Planning 345 Introduction 346 Group Insurance Benefits 346 Group Disability Insurance 346 Group Life Insurance 347 Group Medical Insurance 348 Section 125 Cafeteria Plans 350 Group Long-Term Care Insurance 351 Group Dental Insurance 351 Group Vision Insurance 351 Other Employee Benefits 352 Fringe Benefits 352 Adoption Assistance Program 353 De Minimis Benefits 353 Employee Achievement Awards 353 Educational Assistance Program 354 Prepaid Legal Services 354 Retirement Planning Services 354 Job Placement or Outplacement Services 354 Meals 354 On-Premise Athletic Facilities 355 Qualified Moving Expenses 355 Chapter Review 355 Chapter 21: Applications in Executive Compensation Planning 359 Introduction 360 Executive Compensation Agreements 360 Employment Agreement 360 Severance Agreement 360 Noncompete Agreement 360 Other Arrangements 361 Nonqualified Deferred Compensation 363 Funded and Unfunded Plans 364 Types of Nonqualified Deferred Compensation Plans 364 Equity Compensation Plans 365 Restricted Stock Plan 366 Phantom Stock Plan 366 Qualified Employee Stock Purchase Plan 367 Incentive Stock Option and Nonqualified Stock Option 367 Stock Appreciation Right 368 Section 83(B) Election 368 Top-Hat Plan 369 Chapter Review 369 Chapter 22: Applications in Personal Financial Planning in Special Circumstances 373 Introduction 374 Housing 374 Sale of Principal Residence 374 Vacation Home 376 Household Employees 376 Closely Held Business Basics 378 Entity Selection Process 378 Application of Trusts 382 Employing Spouse or Children and FICA Taxes 382 Business Applications of Insurance 382 Divorce 383 Income Tax Considerations 384 Statement on Standards in Personal Financial Planning and Conflicts of Interest 385 Chapter Review 385 Chapter 23: Delivery Models and Regulatory Issues 389 Introduction 390 Regulatory Landscape 390 Regulatory Bodies 390 Significant Federal Legislation 391 Significant State Legislation 392 Financial Services Industry Regulations and Requirements 393 Securities Licensing 393 Insurance Licensing 394 Regulatory Investment Reporting 395 Delivery Platforms (Business Models) 395 Investment Advisers 395 Registered Investment Adviser 397 Broker-Dealer 398 Insurance Company 398 Trust Company 398 Chapter Review 399
Susan M. Tillery, CPA/PFS, is President and CEO of Paraklete Financial Inc. Paraklete provides integrated fee-for-service financial planning without asset management or product sales. The firm acts as an Advocate in Financial Services for its clients with a disciplined focus on independence and objectivity. Susan is also a co-founder and president of Financial Planning Advocate LLC, a provider of continuing education for CPAs, financial advisers, universities and colleges. Ms. Tillery’s experience at Harris myCFO, a multi-family office where she was responsible for the development and delivery of comprehensive family office solutions to affluent families, together with her work at Arthur Andersen, Ronald Blue & Co and other financial firms, provides the framework for Paraklete. Susan earned both her bachelor’s and master’s degrees in accounting from the University of Georgia. Susan is a member of the American Institute of CPAs (AICPA) and the Georgia Society of CPAs (GSCPA). In addition, she is chair of the AICPA Personal Financial Planning Credential Committee. Susan also serves on the Board for The National Center for Stewardship and Generosity. Susan has over 30 years of experience in tax, philanthropy and financial planning, as well as in the administrative and compliance areas encountered by affluent individuals and families. Ms. Tillery speaks on the topics of: Financial Planning, CPAs and Financial Planning, Financial Issues Facing Women, Responsibilities of Wealth, Charitable Giving and Stewardship. Thomas Neal Tillery, CFP, AEP, CLU, ChFC, CRPC, LUTCF is Vice President and Chief Compliance Officer of Paraklete Financial Inc. Tom also is a co-founder and Vice President of Financial Planning Advocate LLC, a provider of continuing education for CPAs, financial advisers, universities and colleges. Tom earned a M.S. in financial services from The American College and an M.A. in education from The Southern Baptist Theological Seminary. He is an active member of AICPA (Non-CPA Associate), the Atlanta Estate Planning Council and the Society of Financial Service Professionals. He also serves on the Board for The National Center for Stewardship and Generosity. With more than 30 years of experience in personal financial planning, Tom is a frequent speaker and writer on all topics relating to personal financial planning. He has written personal financial planning curriculum for several universities and online providers. Tom has been a provider of continuing education for attorneys, CPAs and investment and insurance professionals for over 30 years. Susan, Tom and their family reside in Kennesaw, GA.
ESSENTIALS OF PERSONAL FINANCIAL PLANNING Essentials of Personal Financial Planning was written to challenge the status quo by promoting personal financial planning (PFP) as a profession, not as a sales tool to gather assets under management or facilitate sales of insurance products. The book takes a comprehensive and integrated approach to PFP for accounting students, allowing them to view the profession through the lens of a CPA – with integrity and objectivity. This book systematically introduces the essentials of all the major PFP topics (estate, retirement, investments, insurance, and tax), as well as: The PFP process, concepts and regulatory environment. Professional responsibilities of a CPA personal financial planner and the requirements of the Statement on Standards in PFP Services. Time value of money concepts. The book then builds on these foundational concepts, showing their interconnectivity and professional opportunities, to provide a deeper understanding of PFP and its application. After reading this book, students will be able to apply the knowledge and skills gained from this course to have an immediate and long-term positive impact for themselves and for the clients they serve.

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