FVgift in PWM

Re: the CFA problems assessing wealth transfer tax-efficiency (FVgift vs. FVbequest, )… they will ask what’s the most tax-efficient, but the solutions only consider one option for the “Gift” …that it is made at Time 0, so the beneficiary rate of return and tax rate is always applicable.

Is there any reason why there is no consideration of making the Gift at a later date (say 10 years), for example if the person giving the gift has a higher RoR and/or lower tax rate?

There is a specific problem in the reading where this appears to be the most tax-efficient option but it’s not considered

Are you asking us to try to delve into CFA Institute’s thought processes?

First things first: get that degree in abnormal psychology.

haha. no. I’m just looking at a question thats asking me whats the most tax-efficient solution (gift or bequest). The most tax-efficient solution that I calculate is a Gift given in 10 years. The CFA answer just ignores this possibility all together and thus provides a different answer.

Their answer is incorrect in my opinion. I try to think the answers through versus just memorizing the formulas, which is why it came up. The whole point of this topic is to compare varying tax rates and RoR’s to determine the best time weighted solution, so it seems odd to me to ignore timing.

I agree.

Welcome to CFA Institute’s world.