Estate and Retirement Planning

You have been the Financial Adviser for Ken and Joan Hill for the last 3-years. You have asked them to stop by for an annual review. During the annual review you discover the following information: Ken and Joan Hill gave $35,000 to their son for a down payment on a house in 2009.

Questions:

1. How much gift will be owed by Ken and Joan for giving the gift to their son?

2. How much income tax will be owed by their son?

3. List three advantages of making this gift.

4. You are the Financial Adviser for the Hill’s. They did not ask you for advice before making this gift to their son. If Ken and Joan Hill had asked you for your expert advice, what would you have recommended?

 

To your surprise, Joan Hill is now deceased. Joan Hill had a $2,500,000 net worth at the time of her death in 2009. In addition, she had a $350,000 whole life policy with a $40,000 of accumulated cash value; her niece was designated as the beneficiary. She also had a $50,000 pension plan benefit.

Questions:

5. What was the value of Joan’s gross estate?

6. How much of her estate is taxable?

7. How much estate tax will need to be paid?

8. How much of her estate must pass through probate? 9. What are the four different taxes that may be imposed on an estate?