E X A M I N AT I O N    21




TOPIC LIST FOR CFP ® CERTIFICATION EXAMINATION

The following topics, based on the 2004 Job...
22   E X A M I N AT I O N




         G. Yield curve                                  3) Poor health                     ...
E X A M I N AT I O N   23




29. Group medical insurance                     D. Planning strategies for employees        ...
24   E X A M I N AT I O N




         B.   Correlation coefficient                 C. Investment policy statements       ...
E X A M I N AT I O N    25




         4) Tax treatment of distributions   56. Passive activity and at-risk rules        ...
26   E X A M I N AT I O N




     63. Other tax-advantaged retirement plans           E. Qualified domestic relations ord...
E X A M I N AT I O N   27




    B. Types and basic provisions              81. Valuation issues                         ...
28   E X A M I N AT I O N




     ADDENDUM

     The following topics are an addendum to the Topic List for CFP® Certific...
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Guide to Cert May 033.2 (Page 21)

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Transcript of "Guide to Cert May 033.2 (Page 21)"

  1. 1. E X A M I N AT I O N 21 TOPIC LIST FOR CFP ® CERTIFICATION EXAMINATION The following topics, based on the 2004 Job Analysis Study, are the basis for the CFP® Certification Examinations. Each exam question will be linked to one of the following topics, in the approximate per- centages indicated following the general headings. Questions will pertain to all levels in Bloom's taxonomy with an emphasis on the higher cognitive levels. Questions often will be asked in the context of the financial planning process and presented in an integrative format. In addition to being used for the CFP® Certification Examination, this list indicates topic coverage requirements to fulfill the pre-certification educational requirement. Continuing education (CE) pro- grams and materials that address these topics will be eligible for CFP Board CE credit. (References to sections (§) in this list refer to sections of the Internal Revenue Code) First Test Date: November 2006 GENERAL PRINCIPLES OF g) Principle 7 - Diligence 7. Function, purpose, and regulation of financial institutions FINANCIAL PLANNING 6) Rules (11%) B) Disciplinary Rules and Procedures A. Banks B. Credit unions 1. Financial planning process 3. CFP Board's Financial Planning Practice C. Brokerage companies A. Purpose, benefits, and components Standards D. Insurance companies B. Steps A. Purpose and applicability E. Mutual fund companies 1) Establishing client-planner rela- B. Content of each series (use most current Practice Standards, as F. Trust companies tionships 2) Gathering client data and posted on CFP Board's Web site at www.CFP.net) 8. Education planning determining goals and expec- A. Funding tations C. Enforcement through Disciplinary Rules and Procedures 1) Needs analysis 3) Determining the client's finan- cial status by analyzing and 2) Tax credits/adjustments/deduc- 4. Financial statements tions evaluating general financial status, special needs, insurance A. Personal 3) Funding strategies and risk management, invest- 1) Statement of financial position 4) Ownership of assets ments, taxation, employee 2) Statement of cash flow 5) Vehicles benefits, retirement, and/or estate planning B. Business a) Qualified tuition programs 1) Balance sheet (§529 plans) 4) Developing and presenting the financial plan 2) Income statement b) Coverdell Education 3) Statement of cash flows Savings Accounts 5) Implementing the financial plan 4) Pro forma statements c) Uniform Transfers to Minors Act (UTMA) and 6) Monitoring the financial plan Uniform Gifts to Minors 5. Cash flow management C. Responsibilities Act (UGMA) accounts A. Budgeting 1) Financial planner d) Savings bonds B. Emergency fund planning 2) Client B. Financial aid C. Debt management ratios 3) Other advisors 1) Consumer debt 9. Financial planning for special circum- 2. CFP Board's Code of Ethics and 2) Housing costs stances Professional Responsibility and 3) Total debt A. Divorce Disciplinary Rules and Procedures B. Disability D. Savings strategies A. Code of Ethics and Professional C. Terminal illness Responsibility 6. Financing strategies D. Non-traditional families 1) Preamble and applicability A. Long-term vs. short-term debt E. Job change and job loss 2) Composition and scope B. Secured vs. unsecured debt F. Dependents with special needs 3) Compliance C. Buy vs. lease/rent G. Monetary windfalls 4) Terminology D. Mortgage financing 5) Principles 1) Conventional vs. adjustable- 10. Economic concepts a) Principle 1 - Integrity rate mortgage (ARM) A. Supply and demand b) Principle 2 - Objectivity 2) Home equity loan and line of B. Fiscal policy credit C. Monetary policy c) Principle 3 - Competence 3) Refinancing cost-benefit analy- D. Economic indicators d) Principle 4 - Fairness sis e) Principle 5 - Confidentiality E. Business cycles 4) Reverse mortgage f) Principle 6 - Professionalism F. Inflation, deflation, and stagflation Rev. 5/06
  2. 2. 22 E X A M I N AT I O N G. Yield curve 3) Poor health H. Policy replacement 4) Unemployment I. Viatical and life settlements 11. Time value of money concepts and cal- culations 5) Superannuation 22. Income taxation of life insurance A. Present value B. Property A. Dividends B. Future value 1) Real B. Withdrawals and loans C. Ordinary annuity and annuity due 2) Personal C. Death benefits D. Net present value (NPV) 3) Auto D. Modified endowment contracts E. Internal rate of return (IRR) C. Liability (MECs) F. Uneven cash flows 1) Negligence E. Transfer-for-value G. Serial payments 2) Intentional torts F. §1035 exchanges 3) Strict liability 12. Financial services regulations and D. Business-related 23. Business uses of insurance requirements A. Buy-sell agreements A. Registration and licensing 17. Property, casualty and liability insur- ance B. Key employee life insurance B. Reporting A. Individual C. Split-dollar life insurance C. Compliance 1) Homeowners insurance D. Business overhead expense insur- D. State securities and insurance laws ance 2) Auto insurance 13. Business law 3) Umbrella liability insurance 24. Insurance needs analysis A. Contracts B. Business A. Life insurance B. Agency 1) Commercial property insurance B. Disability income insurance C. Fiduciary liability 2) Commercial liability insurance C. Long-term care insurance a) Auto liability D. Health insurance 14. Consumer protection laws b) Umbrella liability E. Property insurance A. Bankruptcy c) Professional liability F. Liability insurance B. Fair credit reporting laws d) Directors and officers liabil- C. Privacy policies 25. Insurance policy and company selec- ity D. Identity theft protection tion e) Workers' compensation and employers liability A. Purpose of coverage B. Duration of coverage INSURANCE PLANNING 18. Health insurance and health care cost C. Participating or non-participating management (individual) AND RISK MANAGEMENT D. Cost-benefit analysis (14%) A. Hospital, surgical, and physicians' expense insurance E. Company selection 15. Principles of risk and insurance B. Major medical insurance and 1) Industry ratings A. Definitions calculation of benefits 2) Underwriting B. Concepts C. Continuance and portability 26. Annuities 1) Peril D. Medicare A. Types 2) Hazard E. Taxation of premiums and benefits B. Uses 3) Law of large numbers C. Taxation 4) Adverse selection 19. Disability income insurance (individual) 5) Insurable risks A. Definitions of disability 6) Self-insurance B. Benefit period C. Elimination period EMPLOYEE BENEFITS C. Risk management process PLANNING (8%) D. Response to risk D. Benefit amount E. Provisions 27. Group life insurance 1) Risk control F. Taxation of premiums and benefits A. Types and basic provisions a) Risk avoidance 1) Group term b) Risk diversification 20. Long-term care insurance (individual) 2) Group permanent c) Risk reduction A. Eligibility 3) Dependent coverage 2) Risk financing B. Services covered B. Income tax implications a) Risk retention C. Medicare limitations C. Employee benefit analysis and b) Risk transfer D. Benefit period application E. Legal aspects of insurance E. Elimination period D. Conversion analysis 1) Principle of indemnity F. Benefit amount 2) Insurable interest G. Provisions 28. Group disability insurance 3) Contract requirements H. Taxation of premiums and benefits A. Types and basic provisions 4) Contract characteristics 1) Short-term coverage 5) Policy ownership 21. Life insurance (individual) 2) Long-term coverage 6) Designation of beneficiary A. Concepts and personal uses B. Definitions of disability B. Policy types C. Income tax implications 16. Analysis and evaluation of risk expo- C. Contractual provisions D. Employee benefit analysis and sures application D. Dividend options A. Personal E. Integration with other income E. Nonforfeiture options 1) Death F. Settlement options 2) Disability G. llustrations Rev. 5/06
  3. 3. E X A M I N AT I O N 23 29. Group medical insurance D. Planning strategies for employees d) High-yield A. Types and basic provisions with both incentive stock options e) Convertible and non-qualified stock options 1) Traditional indemnity f) Callable E. Election to include in gross income 2) Managed care plans in the year of transfer (§83(b) elec- 5) Foreign bonds a) Preferred provider organi- tion) C. Promissory notes zation (PPO) D. Individual stocks b) Health maintenance 32. Stock plans 1) Common organization (HMO) A. Types and basic provisions 2) Preferred c) Point-of-service (POS) 1) Restricted stock 3) American depositary receipts B. Income tax implications 2) Phantom stock (ADRs) C. Employee benefit analysis and 3) Stock appreciation rights(SARs) E. Pooled and managed investments application 4) Employee stock purchase plan 1) Exchange-traded funds (ETFs) D. COBRA/HIPAA provisions (ESPP) 2) Unit investment trusts E. Continuation B. Income tax implications 3) Mutual funds F. Savings accounts C. Employee benefit analysis and 4) Closed-end investment compa- 1) Health savings account (HSA) application nies 2) Archer medical savings account D. Election to include in gross income 5) Index securities (MSA) in the year of transfer (§83(b) elec- tion) 6) Hedge funds 3) Health reimbursement arrangement (HRA) 7) Limited partnerships 33. Non-qualified deferred compensation 8) Privately managed accounts 30. Other employee benefits A. Basic provisions and differences 9) Separately managed accounts A. §125 cafeteria plans and flexible from qualified plans F. Guaranteed investmentcontracts spending accounts (FSAs) B. Types of plans and applications (GICs) B. Fringe benefits 1) Salary reduction plans G. Real Estate C. Voluntary employees' beneficiary 2) Salary continuation plans 1) Investor-managed association (VEBA) 3) Rabbi trusts 2) Real estate investment trusts D. Prepaid legal services 4) Secular trusts (REITs) E. Group long-term care insurance C. Income tax implications 3) Real estate limited partner- F. Dental insurance 1) Constructive receipt ships (RELPs) G. Vision insurance 2) Substantial risk of forfeiture 4) Real estate mortgage invest- ment conduits (REMICs) 3) Economic benefit doctrine 31. Employee stock options H. Alternative investments D. Funding methods A. Basic provisions 1) Derivatives E. Strategies 1) Company restrictions a) Puts 2) Transferability b) Calls 3) Exercise price c) Long-term Equity INVESTMENT PLANNING AnticiPation Securities 4) Vesting (19%) (LEAPS®) 5) Expiration 6) Cashless exercise 34. Characteristics, uses and taxation of d) Futures investment vehicles e) Warrants and rights B. Incentive stock options (ISOs) A. Cash and equivalents 2) Tangible assets 1) Income tax implications (regu- lar, AMT, basis) 1) Certificates of deposit a) Collectibles a) Upon grant 2) Money market funds b) Natural resources b) Upon exercise 3) Treasury bills c) Precious metals c) Upon sale 4) Commercial paper 5) Banker's acceptances 35. Types of investment risk 2) Holding period requirements 6) Eurodollars A. Systematic/market/nondiversifiable 3) Disqualifying dispositions B. Individual bonds B. Purchasing power 4) Planning opportunities and strategies 1) U.S. Government bonds and C. Interest rate C. Non-qualified stock options (NSOs) agency securities D. Unsystematic/nonmarket/diversifi- a) Treasury notes and bonds able 1) Income tax implications (regu- lar, AMT, basis) b) Treasury STRIPS E. Business a) Upon grant c) Treasury inflation-protec- F. Financial b) Upon exercise tion securities (TIPS) G. Liquidity and marketability c) Upon sale d) Series EE, HH, and I bonds H. Reinvestment 2) Gifting opportunities e) Mortgage-backed securi- I. Political (sovereign) ties J. Exchange rate a) Unvested/vested 2) Zero-coupon bonds K. Tax b) Exercised/unexercised 3) Municipal bonds L. Investment manager c) Gift tax valuation a) General obligation d) Payment of gift tax 36. Quantitative investment concepts b) Revenue 3) Planning opportunities and A. Distribution of returns strategies 4) Corporate bonds a) Mortgage bond 1) Normal distribution 4) Employee benefits analysis and application b) Debenture 2) Lognormal distribution c) Investment grade 3) Skewness 4) Kurtosis Rev. 5/06
  4. 4. 24 E X A M I N AT I O N B. Correlation coefficient C. Investment policy statements 45. Tax compliance C. Coefficient of determination (R2) D. Appropriate benchmarks A. Filing requirements D. Coefficient of variation E. Probability analysis, B. Audits E. Standard deviation includingMonte Carlo C. Penalties F. Beta F. Tax efficiency 1) Turnover 46. Income tax fundamentals and calcula- G. Covariance tions H. Semivariance 2) Timing of capital gains and losses A. Filing status 37. Measures of investment returns 3) Wash sale rule B. Gross income A. Simple vs. compound return 4) Qualified dividends 1) Inclusions B. Geometric average vs. arithmeti- 5) Tax-free income 2) Exclusions caverage return G. Performance measures 3) Imputed income C. Time-weighted vs. dollar-weighted 1) Sharpe ratio C. Adjustments return D. Standard/Itemized deductions 2) Treynor ratio D. Real (inflation-adjusted) vs. nomi- 1) Types nal return 3) Jensen ratio 4) Information ratio 2) Limitations E. Total return E. Personal and dependency exemp- F. Risk-adjusted return 41. Investment strategies tions G. Holding period return A. Market timing F. Taxable income H. Internal rate of return (IRR) B. Passive investing (indexing) G. Tax liability I. Yield-to-maturity C. Buy and hold 1) Rate schedule J. Yield-to-call D. Portfolio immunization 2) Kiddie tax K. Current yield E. Swaps and collars 3) Self-employment tax L. Taxable equivalent yield (TEY) F. Formula investing H. Tax credits 38. Bond and stock valuation concepts 1) Dollar cost averaging I. Payment of tax A. Bond duration and convexity 2) Dividend reinvestment plans 1) Withholding (DRIPs) 2) Estimated payments B. Capitalized earnings 3) Bond ladders, bullets, and bar- C. Dividend growth models bells 47. Tax accounting D. Ratio analysis G. Use of leverage (margin) A. Accounting periods 1) Price/earnings H. Short selling B. Accounting methods 2) Price/free cash flow I. Hedging and option strategies 1) Cash receipts and disburse- 3) Price/sales ments 4) Price/earnings ÷ growth (PEG) 42. Asset allocation and portfolio diversifi- 2) Accrual method cation E. Book value 3) Hybrid method A. Strategic asset allocation 4) Change in accounting method 39. Investment theory 1) Application of client lifecycle analysis C. Long-term contracts A. Modern portfolio theory (MPT) 2) Client risk tolerance measure- D. Installment sales 1) Capital market line (CML) ment and application E. Inventory valuation and flow a) Mean-variance optimiza- methods tion 3) Asset class definition and cor- relation F. Net operating losses b) Efficient frontier B. Rebalancing 2) Security market line (SML) 48. Characteristics and income taxation of C. Tactical asset allocation business entities B. Efficient market hypothesis (EMH) D. Control of volatility A. Entity types 1) Strong form E. Strategies for dealing with concen- 1) Sole proprietorship 2) Semi-strong form trated portfolios 3) Weak form 2) Partnerships 4) Anomalies 43. Asset pricing models 3) Limited liability company (LLC) C. Behavioral finance A. Capital asset pricing model (CAPM) 4) Corporations B. Arbitrage pricing theory (APT) 5) Trust 40. Portfolio development and analysis 6) Association C. Black-Scholes option valuation A. Fundamental analysis model B. Taxation at entity and owner level 1) Top-down analysis D. Binomial option pricing 1) Formation 2) Bottom-up analysis 2) Flow through of income and 3) Ratio analysis losses a) Liquidity ratios INCOME TAX PLANNING 3) Special taxes b) Activity ratios (14%) 4) Distributions c) Profitability ratios 5) Dissolution 44. Income tax law fundamentals d) Debt ratios 6) Disposition A. Types of authority B. Technical analysis 1) Primary 49. Income taxation of trusts and estates 1) Charting 2) Secondary A. General issues 2) Sentiment indicators B. Research sources 1) Filing requirements 3) Flow of funds indicators 2) Deadlines 4) Market structure indicators 3) Choice of taxable year Rev. 5/06
  5. 5. E X A M I N AT I O N 25 4) Tax treatment of distributions 56. Passive activity and at-risk rules 2) Disability to beneficiaries A. Definitions 3) Survivor 5) Rate structure B. Computations 4) Family limitations B. Grantor/Nongrantor trusts C. Treatment of disallowed losses C. How benefits are calculated C. Simple/Complex trusts D. Disposition of passive activities D. Working after retirement D. Revocable/Irrevocable trusts E. Real estate exceptions E. Taxation of benefits E. Trust income 1) Trust accounting income 57. Tax implications of special circum- 61. Types of retirement plans stances A. Characteristics 2) Trust taxable income A. Married/widowed 1) Qualified plans 3) Distributable net income (DNI) 1) Filing status 2) Non-qualified plans F. Estate income tax 2) Children B. Types and basic provisions of quali- 50. Basis 3) Community and non-commu- fied plans A. Original basis nity property 1) Defined contribution B. Adjusted basis B. Divorce a) Money purchase C. Amortization and accretion 1) Alimony b) Target benefit D. Basis of property received by gift 2) Child support c) Profit sharing and in nontaxable transactions 3) Property division 1) 401(k) plan E. Basis of inherited property (com- 2) Safe harbor 401(k) plan munity and non-community 58. Charitable contributions and deduc- property) tions 3) Age-based plan A. Qualified entities 4) Stock bonus plan 51. Depreciation/cost-recovery concepts 1) Public charities 5) Employee stock owner- A. Modified Accelerated Cost 2) Private charities ship plan (ESOP) Recovery System (MACRS) 6) New comparability plan B. Deduction limitations B. Expensing policy 7) Thrift plan C. Carryover periods C. §179 deduction 2) Defined benefit D. Appreciated property D. Amortization a) Traditional E. Non-deductible contributions E. Depletion b) Cash balance F. Appraisals 52. Tax consequences of like-kind G. Substantiation requirements c) 412(i) plan exchanges H. Charitable contributions by busi- ness entities 62. Qualified plan rules and options A. Reporting requirements A. Nondiscrimination and eligibility B. Qualifying transactions requirements C. Liabilities 1) Age and service requirements D. Boot RETIREMENT PLANNING 2) Coverage requirements E. Related party transactions (19%) 3) Minimum participation 59. Retirement needs analysis 4) Highly compensated employee 53. Tax consequences of the disposition of property A. Assumptions for retirement plan- (HCE) ning 5) Permitted vesting schedules A. Capital assets (§1221) 1) Inflation 6) ADP/ACP testing B. Holding period 2) Retirement period and life 7) Controlled group C. Sale of residence expectancy D. Depreciation recapture B. Integration with Social Security/dis- 3) Lifestyle parity limits E. Related parties 4) Total return 1) Defined benefit plans F. Wash sales B. Income sources 2) Defined contribution plans G. Bargain sales C. Financial needs C. Factors affecting contributions or H. Section 1244 stock (small business 1) Living costs benefits stock election) 2) Charitable and beneficiary gift- 1) Deduction limit (§404(c)) I. Installment sales ing objectives 2) Defined contribution limits J. Involuntary conversions 3) Medical costs, including long- 3) Defined benefit limit term care needs analysis 54. Alternative minimum tax (AMT) 4) Annual compensation limit 4) Other (trust and foundation A. Mechanics 5) Definition of compensation funding, education funding, B. Preferences and adjustments etc.) 6) Multiple plans C. Exclusion items vs. deferral items D. Straight-line returns vs. probability 7) Special rules for self-employed D. Credit:creation, usage, and limita- analysis (non-corporations) tions E. Pure annuity vs. capital preserva- D. Top-heavy plans E. Application to businesses and tion 1) Definition trusts F. Alternatives to compensate for 2) Key employee F. Planning strategies projected cash-flow shortfalls 3) Vesting 55. Tax reduction/management techniques 60. Social Security (Old Age, Survivor, and 4) Effects on contributions or Disability Insurance, OASDI) benefits A. Tax credits A. Paying into the system E. Loans from qualified plans B. Accelerated deductions C. Deferral of income B. Eligibility and benefit D. Intra-family transfers 1) Retirement Rev. 5/06
  6. 6. 26 E X A M I N AT I O N 63. Other tax-advantaged retirement plans E. Qualified domestic relations order 1) Annual exclusion A. Types and basic provisions (QDRO) 2) Applicable credit amount 1) Traditional IRA F. Taxation of distributions 3) Gift splitting 2) Roth IRA, including conversion 1) Tax management techniques 4) Prior taxable gifts analysis 2) Net unrealized appreciation 5) Education and medical exclu- 3) SEP (NUA) sions 4) SIMPLE 6) Marital and charitable deduc- 5) §403(b) plans tions 6) §457 plans ESTATE PLANNING (15%) 7) Tax liability 7) Keogh (HR-10) plans 68. Characteristics and consequences of 73. Incapacity planning property titling 64. Regulatory considerations A. Definition of incapacity A. Community property vs. non-com- A. Employee Retirement Income munity property B. Powers of attorney Security Act (ERISA) B. Sole ownership 1) For health care decisions B. Department of Labor (DOL) regula- C. Joint tenancy with right of sur- 2) For asset management tions vivorship (JTWROS) 3) Durable feature C. Fiduciary liability issues D. Tenancy by the entirety 4) Springing power D. Prohibited transactions E. Tenancy in common 5) General or limited powers E. Reporting requirements F. Trust ownership C. Advance medical directives (e.g. living wills) 65. Key factors affecting plan selection for 69. Methods of property transfer at death businesses D. Guardianship and conservatorship A. Transfers through the probate E. Revocable living trust A. Owner's personal objectives process 1) Tax considerations F. Medicaid planning 1) Testamentary distribution 2) Capital needs at retirement G. Special needs trust 2) Intestate succession 3) Capital needs at death 3) Advantages and disadvantages 74. Estate tax compliance and tax calcula- B. Business' objectives of probate tion 1) Tax considerations 4) Assets subject to probate A. Estate tax filing requirements 2) Administrative cost estate B. The gross estate 3) Cash flow situation and out- 5) Probate avoidance strategies 1) Inclusions look 6) Ancillary probate administra- 2) Exclusions 4) Employee demographics tion C. Deductions 5) Comparison of defined contri- B. Transfers by operation of law D. Adjusted gross estate bution and defined benefit C. Transfers through trusts plan alternatives E. Deductions from the adjusted D. Transfers by contract gross estate 66. Investment considerations for retire- F. Taxable estate 70. Estate planning documents ment plans G. Adjusted taxable gifts A. Wills A. Suitability H. Tentative tax base 1) Legal requirements B. Time horizon I. Tentative tax calculation 2) Types of wills C. Diversification J. Credits 3) Modifying or revoking a will D. Fiduciary considerations 1) Gift tax payable 4) Avoiding will contests E. Unrelated business taxable income 2) Applicable credit amount (UBTI) B. Powers of Attorney 3) Prior transfer credit F. Life insurance C. Trusts G. Appropriate assets for tax-advan- D. Marital property agreements 75. Sources for estate liquidity taged vs. taxable accounts E. Buy-sell agreements A. Sale of assets B. Life insurance 67. Distribution rules, alternatives,and tax- 71. Gifting strategies ation C. Loan A. Inter-vivos gifting A. Premature distributions B. Gift-giving techniques and strate- 76. Powers of appointment 1) Penalties gies A. Use and purpose 2) Exceptions to penalties C. Appropriate gift property B. General and special (limited) pow- 3) Substantially equal payments D. Strategies for closely-held business ers (§72(t)) owners 1) 5-and-5 power B. Election of distribution options E. Gifts of present and future inter- 2) Crummey powers 1) Lump sum distributions ests 3) Distributions for an ascertaina- 2) Annuity options F. Gifts to non-citizen spouses ble standard 3) Rollover G. Tax implications 4) Lapse of power 4) Direct transfer 1) Income C. Tax implications C. Required minimum distributions 2) Gift 3) Estate 77. Types, features, and taxation of trusts 1) Rules 4) Generation-skipping transfer A. Classification 2) Calculations tax (GSTT) 1) Simple and complex 3) Penalties 2) Revocable and irrevocable D. Beneficiary considerations/Stretch 72. Gift tax compliance and tax calculation IRAs 3) Inter-vivos and testamentary A. Gift tax filing requirements B. Calculation Rev. 5/06
  7. 7. E X A M I N AT I O N 27 B. Types and basic provisions 81. Valuation issues C. Federal income, gift, estate, and 1) Totten trust A. Estate freezes generation-skipping transfer tax implications 2) Spendthrift trust 1) Corporate and partnership 3) Bypass trust recapitalizations (§2701) 85. Generation-skipping transfer tax 4) Marital trust 2) Transfers in trust (GSTT) 5) Qualified terminable interest B. Valuation discounts for business A. Identify transfers subject to the property (QTIP) trust interests GSTT 6) Pour-over trust 1) Minority discounts 1) Direct skips 7) §2503(b) trust 2) Marketability discounts 2) Taxable distributions 8) §2503(c) trust 3) Blockage discounts 3) Taxable terminations 9) Sprinkling provision 4) Key person discounts B. Exemptions and exclusions from C. Trust beneficiaries: Income and C. Valuation techniques and thefed- the GSTT remainder eral gross estate 1) The GSTT exemption D. Rule against perpetuities 2) Qualifying annual exclusion 82. Marital deduction gifts and direct transfers E. Estate and gift taxation A. Requirements 78. Qualified interest trusts B. Qualifying transfers 86. Fiduciaries A. Grantor retained annuity trusts C. Terminable interest rule and excep- A. Types of fiduciaries (GRATs) tions 1) Executor/Personal representa- B. Grantor retained unitrusts (GRUTs) D. Qualified domestic trust (QDOT) tive C. Qualified personal residence trusts 2) Trustee 83. Deferral and minimization of estate 3) Guardian (QPRTs or House-GRITs) taxes D. Valuation of qualified interests B. Duties of fiduciaries A. Exclusion of property from the gross estate C. Breach of fiduciary duties 79. Charitable transfers B. Lifetime gifting strategies 87. Income in respect of a decedent (IRD) A. Outright gifts C. Marital deduction and bypass trust A. Assets qualifying as IRD B. Charitable remainder trusts planning 1) Unitrusts (CRUTs) B. Calculation for IRD deduction D. Inter-vivos and testamentary chari- 2) Annuity trusts(CRATs) table gifts C. Income tax treatment C. Charitable lead trusts 84. Intra-family and other business trans- 88. Postmortem estate planning tech- 1) Unitrusts (CLUTs) niques fer techniques 2) Annuity trusts (CLATs) A. Alternate valuation date A. Characteristics D. Charitable gift annuities B. Qualified disclaimer B. Techniques E. Pooled income funds C. Deferral of estate tax (§6166) 1) Buy-sell agreement F. Private foundations D. Corporate stock redemption (§303) 2) Installment note G. Donor advised funds E. Special use valuation (§2032A) 3) Self-canceling installment note H. Estate and gift taxation (SCIN) 89. Estate planning for non-traditional 80. Use of life insurance in estate planning 4) Private annuity relationships A. Incidents of ownership 5) Transfers in trust A. Children of another relationship B. Ownership and beneficiary consid- 6) Intra-family loan B. Cohabitation erations 7) Bargain sale C. Adoption C. Irrevocable life insurance trust 8) Gift or sale leaseback D. Same-sex relationships (ILIT) 9) Intentionally defective grantor D. Estate and gift taxation trust 10) Family limited partnership (FLP) or limited liability com- pany (LLC) Rev. 5/06
  8. 8. 28 E X A M I N AT I O N ADDENDUM The following topics are an addendum to the Topic List for CFP® Certification Examination. Although individuals taking the CFP® Certification Examination will not be tested directly over these topics, CFP Board-Registered Programs are strongly encouraged to teach them in their curricula. Continuing educa- tion (CE) programs and materials that address these topics will be eligible for CFP Board CE credit. 1. Client and planner attitudes, values, 1) Interviewing 2) Facial expressions and eye con- biases and behavioral characteristics 2) Counseling tact and the impact on financial planning 3) Voice tone and pitch 3) Advising A. Cultural 4) Interpreting the meaning of B. Essentials in financial counseling B. Family (e.g. biological; non-tradi- nonverbal behaviors 1) Establishing structure tional) E. Attending and listening skills 2) Creating rapport C. Emotional 1) Physical attending 3) Recognizing resistance D. Life cycle and age 2) Active listening C. Characteristics of effective coun- E. Client's level of knowledge, expe- 3) Responding during active lis- selors rience, and expertise tening; leading responses 1) Unconditional positive regard F. Risk tolerance F. Effective use of questions 2) Accurate empathy G. Values-driven planning 1) Appropriate types of questions 3) Genuineness and self-aware- 2. Principles of communication and coun- ness 2) Ineffective and counterproduc- seling tive questioning techniques D. Nonverbal behaviors A. Types of structured communica- 1) Body positions, movements, tion and gestures Rev. 5/06

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