Question

Question 11

A "living will" does which of the following:

Provides an individual with steady income while he/she is still alive

Allows a family member to take over a person's financial affairs

Updates a will's executor if she/he dies

Describes an individuals wishes in a medical emergency or for end-of-life care

Helps estate attorneys make a living

Question 12

After several years of uncertainty and change, the federal estate tax seems set -- at least for the next few years. In 2016, the exemption was $5,450,000 per person, with a 40% tax on any amount above that amount. (Technically, the tax rate is lower than 40% if the taxable estate is less than $1 million, but don't worry about this.) Moreover, people who die but are survived by a spouse can have their unused exemption passed on to a surviving spouse. This allows couples to exempt $10.9 million from any taxes.

Imagine that Catherine and Cliff Clawsen have a combined estate of $10 million. Catherine passes away. In her will, she wants $1 million to go to each of her two children (Clarence and Cheryl) upon her death, with the remaining amount going to her healthy husband Cliff. How much will the estate be taxed on the amount inherited by Clarence and Cheryl?

$4 million

$400,000

$200,000

$80,000

$0

Question 13

Let's stay with Catherine and Cliff. Suppose that they die simultaneously in a plane crash with an estate of $10 million. How much will be deducted in taxes before their children receive an inheritance?

$4 million

$1.82 million

$400,000

$200,000

$0

Question 14

Here's a final question about Catherine and Cliff. What if they die simultaneously but have an estate of $20 million, not $10 million. How much will their children inherit AFTER TAXES?

$0

$3.64 million

$8 million

$12 million

$16.36 million

Question 15

In addition to giving away money at the time of their death, individuals are allowed to give gifts of money during their lifetime. They are allowed to give up to $14,000 per year to as many individuals as they would like without having anyone having to pay any taxes. The gifts are said to be "excluded" from taxation. (It is possible to give more than $14,000 based on the lifetime gift tax exemption, but let's ignore that for now.)   Assuming that my wife and I have plenty of money, how much could the two of us give to our son Brandan and his wife Lindsay IN TOTAL this year without anyone having to pay gift taxes?

$14,000

$28,000

$42,000

$56,000

$70,000

Answer 1

Question 11

A 'Living Will' is a document that states in specific manner the instructions with respect to medical care that an individual will want to have in case of a medical emergency or with respect to the end-of-life care when such individual is not in condition to communicate in explicit terms his or her preference.

So,

'Living Will' describes an individual's wishes in a medical emergency or for end-of-life care.

Hence, the correct answer is the option (4).