Question

31) Herbert Dix picked up a booklet at his attorney's office that described estate planning. All of the following were included as primary objectives of estate planning except

A) develop a plan that minimizes settlement costs, including legal and accounting fees.

B) distribute property according to your wishes and provide for your dependents.

C) develop a plan that will minimize estate and inheritance taxes.

D) utilize a living will to describe your choices in a terminal situation and a health care proxy to identify those to whom you relinquish health care decision-making authority in the event of physical or mental impairment.

E) estate planning involves all of the above objectives.

32) You and your spouse wish to give each of your three grandchildren a yearly tax-free gift from your estate. If you give each of your three grandchildren the maximum amount allowed by law, what is the total amount that you as a couple would pay out in gifts in 2017?

A) $84,000 per year B) $14,000 per year C) $54,000 per year D) $42,000 per year

33) What does the generation skipping tax do?

A) It allows grandparents to skip paying taxes on funds gifted to grandchildren.

B) It encourages parents to skip leaving funds to their own children and to plan on leaving their estate to their grandchildren.

C) It imposed additional tax on gifts and bequests that are made from grandparent to grandchild.

D) All of the above

E) None of the above

34) What is the first step in probate?

A) Distributing the assets B) Pay taxes C) Validation of the will D) Appoint an executor

35) You were almost killed in a recent mountain bike accident and have decided to write a will. You also plan to construct a(n) ________, which will give information and directions with respect to the execution of your will.

A) attestation and witness clause B) codicil

C) living trust D) appointment clause

E) letter of last instructions

36) An attachment to a will that alters or amends a portion of the will is called a

A) revocation. B) codicil. C) proxy. D) letter of last instructions. E) none of the above.

37) A married couple with 2 children and 5 grandchildren has an estate valued at $4 million. They decide to use gifts as a means to transfer some of their wealth to their family now and lower the value of their estate. If for a five-year period the couple give the maximum tax-free gift to each of their children and grandchildren, the value of their estate would be reduced to

A) $3,916,000.

B) $420,000.

C) $84,000.

D) $3,020,000.

38) The legal procedure that establishes the validity of a will, and then distributes the assets of the estate including the payment of any taxes, is called

A) verification. B) establishment hearing.

C) certification hearing. D) probate.

39) Which of the following is/are a typical cash need(s) of one's estate?

A) Estate and inheritance taxes B) Legal fees

C) Funeral expenses D) Outstanding debt

E) All of the above

40) An individual who is responsible for carrying out the provisions of your will and managing your property until the estate is passed on to your heirs is called the

A) executor.    B) lease. C) attorney. D) receptor. E) none of the above.

41) What is the name for a document that provides for someone to act in your place for legal and financial matters in the event that you become mentally incapacitated?

A) Incapacitated power of attorney B) Revocable power of attorney

C) Durable power of attorney D) Specific power of attorney

E) None of the above

42) Which of the following statements is correct?

A) You should make sure that you can repay what you borrow.

B) You should know the costs of borrowing.

C) You should understand the difference between good and bad debt.

D) You should spend less than you earn and budget your money.

E) All of the above statements are correct.

43) Molly just received a $5,000 inheritance. She wants to open an IRA for retirement, 40 years from today. If she can earn 11% per year in her IRA, how much will she be able to take out annually for 20 years in retirement?

A) $24,182 B) $40,812 C) $35,041 D) $16,250

44) Sam wants to start saving for retirement. She wants to have $85,000 per year for 25 years in retirement that will start in 40 years. How much must she deposit in equal annual amounts for the next 20 years if she can earn 9% over the life of her investment?

A) $8,752 B) $4,325 C) $2,912 D) $16,319 6

45) You put $5,000 per year in an IRA earning 10% a year starting when you graduate and stop 15 years later. How much will you have for retirement, 30 years after you stop depositing, if the account continues to earns 10% a year?

A) $2,772,054 B) $158,862 C) $4,320,889   D) $1,995 420

Answer 1

42)
E) All of the above statements are correct.

43)
=5000*1.11^40*11%/(1-1/1.11^20)=40812.6265

44)
=85000/9%*(1-1/1.09^25)*1/1.09^20*1/(1.09^20-1)*9%=2911.9437

45)
=5000/10%*(1.1^15-1)*1.1^30=2772054.0708