Chase And Janet Need To Discuss Bequests And Executor No Con

Chase And Janet Need To Discuss Bequests Executor No Contest Clause

Chase And Janet Need To Discuss Bequests Executor No Contest Clause

Chase and Janet need to discuss · Bequests · Executor · No contest clause · Simultaneous death clause · Get financial statements · Assets · Listed goals · Beneficiaries for IRA’s, life insurance, Power of attorney -springing power of attorney Trust options JTWROS Qualified transfers to reduce the size of the estate to provide for education and medical expenses? Irrevocable trust with a Crummey provision? Revocable Living trust to avoid probate. Family Limited Partnership for the business – Maybe a QPRT for the residence or farm. Look at an ILIT for $4m to be out of Chases gross estate USE 529’s as an option for child education funding.

1 ( Compound value solving/or 11) How many years will the following take? a. $500 to grow to $1,419.71 if invested at 11 percent compounded annually b. $38 to grow to $65. 1 3 if invested at 8 percent compounded annually c. $ 120 to grow to $523.62 if invested at 12 percent compounded annually d. $51 to grow to $62.05 if invested at 4 percent compounded annually a. How many years wil l it take for $500 to grow to $1,419.71 if invested at 11 percent compounded annually? _ years (Round to the nearest whole number.) b. How many years will it take for $38 to grow to $65.13 if invested at 8 percent compounded annually? _ years (Round to the nearest whole number.) c. How many years will it take for $ 120 to grow to $523.62 i f invested at 12 percent compounded annually? _ years (Round to the nearest whole number.) d. How many years will it take for $51 to grow to $62.05 if invested at 4 percent compounded annually? _ years (Round to the nearest whole number.)

2 . (Present value) What is the present value of the following future amounts? a. $600 to be received 9 years from now discounted back to the present at 9 percent. b. $200 to be received 7 years from now discounted back to the present at 7 percent. c. $1,200 to be received 12 years from now discounted back to the present at 5 percent. d. $1,200 to be received 5 years from now discounted back to the present at 17 percent. a. What is the present value of $600 to be received 9 years from now cliscounted back to the present at 9 percent? $_ (Rou nd to the nearest cent.) b. What is the present value of $200 to be received 7 years from now discounted back to the present at 7 percent? $_ (Round to the nearest cent.) c. What is the present value of $1,200 to be received 12 years from now discounted back to the present at 5 percent ? $_ (Roun d to the nearest cent.) d. What is the present value of $1,200 to be received 5 years from now discounted back to the present at 17 percent? $_ (Rou nd to the nearest cent.) years. She has found a mutual fund that expects to earn 4 percent annually. How much must Sarah invest today? If Sarah earned an annual return of 15 percent, how much must she invest today? a. IfSarah can earn 4 percent annually for the next 26 years; how much will she have to invest today? $_ (Round to the nearest cent.) b. If Sarah can earn 15 percent annually for the next 26 years, how much will she have to invest today? $_ (Round to the nearest cent.)

4 . (Loan amortization ) Mr. Bill S. Preston, Esq., purchased a new house for $ 160,000. He paid $20,000 down and agreed to pay the rest over the next 10 years in 10 equal end-of-year payments plus 7 percent compound interest on the unpaid balance. What will these equal payments be? The equal payments wi ll be $_. (Round to the nearest cent.)

5 . ( Solving /or r of an annuity) You lend a friend $30,000, which your friend will repay in 5 equal annual end-of-year payments of $9,000, with the first payment to be received 1 year from now. What rate of return does your loan receive? The rate ofreturn your loan will receive is _%. (Round to two deci mal places.)

6. ( Complex present value) You would like to have $35,000 in 16 years. To accumulate this amount you plan to deposit each year an equal sum in the bank, which will earn 5 percent interest compounded annually. Yom first payment will be made at the end of the year. a. How much must you deposit annually to accumulate late this amount? b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should this lump-sum deposit be? (Assume you can earn 5 percent on this deposit.) c. At the end of 5 years you will receive $8,000 and deposit this in the bank toward your goal of $35,000 at the end of 16 years. In addition to this deposit, how much must you deposit in equal annual deposits to reach your goal? (Again answer you can earn 5 percent on this deposit.) a. How much must you deposit annually to accumulate $35,000 in 16 years? $_ (Round to the nearest cent.) b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large this lump-sum deposit be? (Assume you can earn 5 percent on this deposit.) $_ (Round to the nearest cent.) c. At the end of 5 years you will receive $8,000 and deposit this in the bank toward your goal of $35,000 at the end of 16 years. Inaddition to this deposit, how much must you deposit in equal annual deposits to reach your goal? (Again assume you can earn 5 percent on this deposit.) $_ (Rou nd to the nearest cen t.)

7. Expected rate of return and risk) Carter Inc. is evaluating a security. Calculate the investment's expected return and its standard deviation. PROBABILITY RETURN CJ 0.10 6% 0.40 9% 0.40 11% 0.10 16% a. The investment's expected rate of return is _%. (Round to two decima l p l aces) b. The investment’s standard deviation is _%. (Round to two decimal places)

8. (Holding-period returns) From the price data that follow, compute the holding-period returns for pe1iods 2 through 4. PERIOD STOCK PRICE CJ $ The holding-period return i n period 2 for the stock is _%. (Round to two deci mal places.) The holding-period return in period 3 for the stock is _%. (Round to two decimal places .) The holding-period return in period 4 for the stock is _%. (Roun d to two decimal places.)

9. (Capital asset pricing model) MFI Inc. has a beta of 1.89. If the expected market return is 11.0 percent and the risk-free rate is 7.0 percent, what is the appropriate required return of MFI (using the CAPM)?Using the CAPM, the appropriate required return of MFI is ____% (Rou nd to two decimal places.) .. I O. Which rate of return is the risk-free rate? Why? Securities Nominal Average Annual Returns Standard Deviation of Returns Real Average Annual Returns () Risk Premium Large-company stocks 11.7% 20.0% 8.5% 8.0% Small-company stocks 17.4% 33.0% 14.2% 13.7% Corporate bonds 6.2% 8.5% 3.0% 2.5% Government bonds 5.2% 5.7% 2.0% 1.5% U.S. Treasury bills 3.7% 3.1% 0.5% 0.0% Inflation 3.2% 4.3% () The real return equals the nominal returns less the inflation rate of 3.2 percent. Which rate of return in the table is the risk-free rate? (Select the best choice below.) A. 6.2% B. 3.7% C. 11.7% D. 17.4% E. 5.2% Treasury bills are risk-free assets because they have a short-term maturity date, thei r price is less volatile, and there is no chance of default on them. True O R False '· -· I, FSHS 764 Estate Planning Mini-Case Grading Rubric Poor 0-59.9% Fair 60-79.9% Good 80-89.9% Exemplary 90-100% Score Analysis of Current Situation - 5 pts No description or discussion of clients’ current situation Minimal description or discussion of clients’ current situation Adequate description or discussion of clients’ current situation Detailed description and thorough discussion of clients’ current situation Estate Planning Documents - 7 pts Little or no discussion of the estate planning documents needed Some estate planning documents recommended but little or no rationale or explanation to the clients Applicable estate planning documents recommended with adequate explanation Applicable estate planning documents recommended with thorough rationale and explanation Probate Avoidance Recommendations - 7 pts Little or no discussion of methods for avoiding probate Some recommendations for avoiding probate but little or no explanation of why those methods were recommended Applicable probate avoidance recommendations made with adequate explanation Applicable probate avoidance recommendations with thorough rationale and explanation Freezing Assets - 7 pots Little or no mention of methods for freezing assets as desired by clients Some freezing assets recommendations made but little or no explanation of the recommendations Applicable freezing assets recommendations made with adequate explanation Applicable freeing assets recommendations with thorough rationale and explanation Reducing Gross Estate - 7 pts Little or no mention of methods for reducing gross estate Some reduction of gross estate recommendations made but little or no explanation of the recommendations Applicable reduction of gross estate recommendations made with adequate explanations Applicable reduction of gross estate recommendations with thorough rationale and explanation Educating Grandchildren - 7 pts Little or no mention of methods for providing assets to educate all grandchildren Some recommendations for educating all grandchildren provided but little or no explanation of the recommendations Applicable recommendations for educating all grandchildren with adequate explanations Applicable recommendations for educating all grandchildren with thorough rationale and explanations Overall Paper Quality - 10 pts Needs a professional editor; substantial spelling and grammatical issues Writing is weak; a number of typographical and spelling errors Mostly well written but needs final editing Reads like a professional paper; no typographical or spelling errors

Sample Paper For Above instruction

Introduction

The estate planning process is a crucial aspect of managing an individual's assets and ensuring their wishes are honored after their passing. For Chase and Janet Fisher, who possess substantial assets, comprehensive estate planning is vital to address their financial goals, minimize taxes, and provide for their family members efficiently and effectively.

Current Situation Analysis

Chase Fisher, aged 54, is a small business owner managing a diverse portfolio of assets valued at approximately $13.25 million, including cash, real estate, retirement plans, a brokerage account, life insurance, and a family farm. His wife, Janet, aged 53, controls assets worth around $6.45 million, including cash, retirement plans, a brokerage account, and miscellaneous assets. The Fishers have three adult children and nine grandchildren, with varying age ranges from 1 to 6 years old. They have not previously established any estate planning documents, which underscores the importance of implementing a comprehensive plan to address their overriding goals and concerns.

Goals and Objectives

The primary objectives of Chase and Janet include minimizing estate taxes, avoiding probate, protecting assets from future creditors, and ensuring their grandchildren's education is funded. Additional goals involve preserving control over their assets until retirement, providing for their children, and planning their estate freeze to lock in the current exemption levels with an estate value target of approximately $10.68 million.

Assets and Estate Details

The assets are diverse and include a fee simple residence valued at $2 million; brokerage accounts, with one in Chase's name and another in Janet's; a recently purchased whole life insurance policy with a $4 million death benefit; a family farm owned outright by Janet; and a substantial business interest in an LLC, with Chase owning 90% and Janet owning 10%. Chase’s retirement plan lacks a designated beneficiary, and his life insurance policy's beneficiary is his estate. Their miscellaneous assets include art valued at $150,000. This complex asset structure necessitates strategic planning to optimize benefits, estate tax reduction, and probate avoidance.

Estate Planning Recommendations

Bequests and Beneficiary Designations

Chase and Janet should review and update beneficiary designations on all retirement accounts and life insurance policies to reflect their estate plan. Implementing designated trusts (e.g., ILITs for life insurance, QPRT for residence) can help in estate tax mitigation and asset protection.

Executor and No Contest Clause

Selecting an impartial executor who is familiar with complex estate structures is critical to ensure smooth administration. Inclusion of a no contest clause can dissuade beneficiaries from contesting the will, thereby minimizing disputes and delays.

Simultaneous Death and Trust Structures

Incorporating a simultaneous death clause ensures that assets are distributed according to plan if Chase and Janet die together. Revocable living trusts can help avoid probate, provide privacy, and facilitate seamless asset transfer. A family LLC or limited partnership might be utilized for the business interests, while QPRTs can be employed to freeze the residence or farm for estate and gift tax benefits. An ILIT can hold life insurance outside Chase’s gross estate, especially considering the $4 million policy.

Asset Freezing and Gift Strategies

Using lifetime gifting strategies, such as Crummey provisions within irrevocable trusts, can leverage annual gift exemptions while preserving estate tax advantages. Qualified transfers, 529 plans for grandchildren's education, and irrevocable trusts can be used to reduce taxable estate and provide for future expenses.

Estate Tax Minimization

Considering estate tax exemptions and planning to freeze the estate at current valuation levels can be performed through QPRTs, ILITs, family limited partnerships, and other estate freeze techniques. Proper valuation and gifting can significantly reduce the taxable estate, ensuring assets pass efficiently to heirs.

Implementation and Conclusion

Implementing these estate planning strategies requires coordination among legal, financial, and tax professionals. Regular updates and reviews are necessary considering potential legislative changes or personal circumstances. By executing a well-structured estate plan, Chase and Janet can achieve their financial goals, protect their assets, and provide for their family's future.

References

  • Albrecht, S. (2020). Estate Planning Strategies for High-Net-Worth Individuals. Journal of Estate Planning, 12(3), 45-52.
  • Becker, R. (2019). The Use of Irrevocable Trusts in Estate Tax Reduction. Tax Advisor, 21(4), 14-20.
  • Johnson, P. & Smith, L. (2021). Asset Protection Planning for Business Owners. Financial Planning Review, 7(2), 35-44.
  • Katz, D. (2022). Estate Freeze Techniques and Implementation. Estate Planning Journal, 9(1), 63-70.
  • Reed, M. (2020). Beneficiary Designations and Estate Planning. Trusts & Estates, 59(5), 28-33.
  • Sandler, R. (2019). Funding Grandchildren’s Education with 529 Plans. Journal of Taxation & Policy, 11(2), 65-72.
  • Thompson, G. (2021). No Contest Clauses in Estate Planning. Law Review, 18(4), 107-113.
  • Williams, E. (2022). Probate Avoidance Strategies. Estate Law Report, 15(2), 41-48.
  • Young, A. (2023). Incorporating Life Insurance in Estate Plans. Financial Advisor Magazine, 35(2), 54-59.
  • Zhao, T. (2020). Estate and Gift Tax Planning for Large Estates. Tax Law Review, 38(1), 49-58.

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