BUSI 223 Read & Interact Dlabay, Hart, Hughes, & Kapoor Chapter 18-19 solutions complete answers

BUSI 223 Read & Interact Dlabay, Hart, Hughes, & Kapoor Chapter 18-19 solutions complete answers

 

A married couple can give up to $30,000 to one person person per   (in 2021) without incurring a gift tax.

 

No   tax is due on gifts up to $15,000 for 2021 to any one person in any one year.

 

If you die without preparing a will, it is called to die  .

 

According to the text, a married couple can give up to what amount of money per person in one year (based on 2021 exclusion amount) without incurring a gift tax?

 

A person or an institution that holds or generally manages property for the benefit of someone else is called a(n) Blank______.

 

A(n)   is a person who assumes the responsibilities of providing children with personal care and of managing the estate for them.

 

The requirements of a formal will include which of the following?

 

Which of the following is NOT true about who can perform the duties of executor of an estate?

 

Which of the following statements best characterize estate planning as part of the retirement and financial planning process?

 

True or false: The two main components of estate planning are insurance planning and investing.

 

The will must name an   who will ensure your estate is distributed according to your wishes.

 

A will is the legal   that specifies how you want your property to be   after your death.

 

A substantial hardship may follow a person's death if necessary Blank______ are difficult to find.

 

A(n)   is the most practical first step in estate planning which clearly indicates how you want your property to be distributed after you die.

 

Death causes the transfer of your estate to charities or your heirs.

 

The types of complications that can occur as beneficiaries gather important estate documents include:

 

The two main components of estate planning involve   your estate through various strategies (such as savings, investing, and insurance) and   your estate at death according to your wishes.

 

For a traditional IRA, you can contribute up to $6,000 per year if you are under age 50 and up to $7,000 if you are over age  .

 

Which of the following describes tax implications of withdrawing from an IRA before age 59.5?

 

A Roth IRA may be better for you than a traditional IRA if you are saving for your first home or retirement at age 59.5, as the   can be made tax free and without penalty.

 

Match the portability of defined-benefit and defined-contribution plans.

 

The 403(b) and 401(k) accounts are examples of employee retirement  -contribution plans.

 

To make a realistic comparison of present and estimated future expenses, rent or mortgage payments should fall under   expenses.

 

According to the Securities and Exchange Commission, the easiest ways to boost your retirement savings are to take advantage of your employer's matching some or all of your Blank______ to the retirement plan, focus on low fees and expenses, and save by regular, automatic deductions from your paycheck.

 

To get the benefits of the power of compounding, you should begin saving for retirement while you are still  .

 

According to the Securities and Exchange Commission, the easiest ways to boost your retirement savings are to take advantage of your employer's ____, focus on low fees, and save by payroll deduction.

 

Financial planning for retirement involves assessing your post-retirement needs and income and:

 

Emotional planning for retirement involves identifying your       goals and setting out to       those goals.

 

You should begin saving for retirement while you are still young because you will probably have to pay more of your own retirement than prior     .

 

Your first step in retirement planning is to analyze your current       and liabilities.

 

True or false: When planning for a successful retirement savings plan, one must constantly focus on the plan and evaluate regularly.

 

When projecting post-retirement living expenses, make a       estimate when calculating how much the prices of goods and services will increase due to      .

 

Financial planning for retirement involves assessing your post retirement       and income and plugging any       you find.

 

The potential ____________ due to inflation is what makes planning ahead so important.

 

Emotional planning for retirement involves:

 

When you find a retirement city that appeals to you, you should visit the area during various times during the year to experience the year-round ____.

 

True or false: It is mandatory to start saving a large amount very early because retirement will be expensive.

 

True or false: Typical retiree housing considerations include cost of maintenance, taxes, transportation, and proximity to shopping and entertainment.

 

The very first steps of retirement planning include:

 

To make a realistic comparision of present and estimated future expenses, rent or mortgage payments should fall under       expenses.

 

During retirement,       will probably cause your cost of living to increase.

 

Sources of income for many retirees are social security, other public pension plans, employer pension plans, personal retirement plans, and annuities.

 

True or false: When researching a retirement location, factors such as year-round climate, available transportation, and taxes should be considered to determine what you will give up and what you will gain.

 

The increase in Social Security benefits if you retire at an age greater than 65 can best be summarized as:

 

Housing needs often change as people grow _______.

 

True or false: A person must work 20 years to be eligible for Social Security retirement benefits.

 

The full benefit for a spouse is ____ of the retired worker's full benefit.

 

Which of the following are reasons why many believe that the Social Security system will have financial problems in the years to come?

 

Sources of retirement income include Social Security, other public       plans, employer pension plans, personal retirement plans, and      .

 

True or false: The contributions and earnings of an employer-sponsored pension plan accumulate tax free until you withdraw them.

 

The reduction in Social Security benefits that occur if you retire early (age 62) can best be summarized as which of the following?

 

If you are born after 1928, you become eligible for Social Security retirement benefits if you have       quarters of coverage.

 

The 403-(b) and 401(k) accounts are examples of employee retirement      -contribution plans.

 

The full Social Security benefit for a       is one-half of the retired worker's full benefit.

 

True or false: One of the reasons that Social Security is expected to have problems in the future is the shorter life expectancy of Americans.

 

A 401(k) plan and the nonprofit equivalent, called a 403(b) plan, are       reduction plans that reduce your salary by the amount of your contributions and result in a lower current tax liability.

 

An employer pension plan usually involves contributions by you and your      .

 

Which plan's retirement payments are dependent on investment returns?

 

An IRA entails the establishment of a       account.

 

A defined-contribution retirement plan provides an individual       for each participant.

 

Which of the following are rules of the traditional IRA?

 

The earnings on 401(k), 457, and 403(b) plans are tax-      until they are withdrawn.

 

Match the control of assets in the defined-benefit and defined-contribution plans.

 

True or false: An Individual Retirement Account (IRA) is an account where the employer deposits money for each individual employee.

 

With a Roth IRA, contributions are not tax deductible, but       accumulate tax free.

 

For a traditional IRA, you can contribute up to $5,500 per year if you are under age 50 and up to $6,500 if you are over age      .

 

A Roth IRA may be a better for you than a traditional IRA if you are saving for your first home or retirement at age 59.5, as the       can be made tax free and without penalty.

 

Withdrawing funds from your IRA before age 59.5 usually results in a 10%       in addition to the entire amount of the withdrawal being taxable as ordinary income.

 

With a(n) ______, your employer makes nontaxable contributions to the plan for your benefit and reduces your salary by the same amount.

 

The minimum required distribution is based on life expectancy       produced by the IRS.

 

Match the funding of defined-benefit versus defined-contribution plans.

 

Which of the following are true about the rules of a Roth IRA?

 

A Keogh plan is a qualified pension plan developed for _____.

 

True or false: A Roth IRA may be better for you than a traditional IRA depending on your anticipated tax bracket.

 

An annuity is a contract that could provide retirement income for      .

 

If you take a lump-sum distribution from your IRA, how will the amount be treated for tax purposes?

 

For most tax-qualified retirement plans, including 403(b), 401(k), and all IRAs except the Roth IRA, there are       lifetime distributions at age 70.5.

 

Which of the following are the disadvantages of employee pension plans?

 

True or false: An estate is everything you own.

 

A Keogh plan is a qualified       plan in which tax-      contributions fund the retirement of self-employed people and their employees.

 

Which of the following best describes the tax rules with regards to the payments from an annuity?

 

True or false: Both wills and trusts are key to estate planning.

 

Select each of the following that are IRA withdrawal options.

 

Death causes a transfer of your estate to:

 

Which of the following are the disadvantages of individual saving and investing as sources of income for retirement?

 

The three factors necessary to make your desires known upon death are:

 

A(n)       includes everything you own.

 

The most practical first step in estate planning is the       of a will. (Enter only one word per blank.)

 

A will is a way to       property after you die.

 

The two documents that are key to the implementation of an estate plan are:

 

If you die      , you die without a valid will.

 

Which of the following statements best characterizes estate planning as part of the retirement and financial planning process?

 

To be sure your desires are known at your death they should be accessible, understandable, and legally      .

 

True or false: You must be 21 years of age to write a legal will.

 

Because a will clearly details how you want your property to be distributed when you die, its preparation is considered the most practical       step in the estate planning process.

 

True or false: The purpose of a will is to make it clear how you want your property to be distributed during your lifetime before your death.

 

What is the purpose of a probate court?

 

To die without a valid will is to die:

 

Which of the following are basic advantages of a living trust over a probate court?

 

True or false: Estate planning is part of the overall process of financial and retirement planning.

 

The reasons why it is best to avoid probate court include:

 

An executor's job is to carry out the       according to your wishes.

 

True or false: A simple will is easy to prepare and leaves everything to the children.

 

A(n)       is person who has been named to receive a portion of your estate after your death.

 

The legal procedure of proving a will valid or invalid is called      .

 

Jointly       property passes directly to the joint owner and may be appropriate for some      , such as a home.

 

True or false: A living trust is less expensive, quicker, and more private than probate court.

 

The executor of an estate has many tasks, two of which are conducting a(n)       of assets and settling the       of the estate.

 

You should plan your estate so as to avoid probate court as it can be       and the process can be lengthy, and it makes public some facts regarding your estate.

 

A simple will is easy to prepare and leaves:

 

True or false: An executor can be a friend, family member, trusted adviser, or the trust department of a bank.

 

When preparing a formal will, one usually uses the services of a(n)     .

 

True or false: A trustee is a person who assumes responsibility for providing children with personal care and managing the estate for their benefit.

 

True or false: Jointly owned property passes directly to the surviving children and may be appropriate for some assets, such as a home.

 

A      , is a person that holds property for the benefit of someone else under a trust agreement.

 

Which of the following are tasks of an executor?

 

A living will provides for your wishes to be followed if you become so physically or mentally       that you are unable to act on your own behalf.

 

Any U.S. citizen over 18 who has not been convicted of a felony can be named the       of a will.

 

Which of the following are steps you should take when preparing a living will?

 

A       is a person who assumes responsibility for providing children with personal care and for managing the estate.

 

A durable power of       is a legal document authorizing someone to act on one's behalf.

 

A letter of last instruction:

 

A living will provides for your wishes to be followed if you:

 

Which type of trust allows the trustor to retain the right to end or change the terms of the trust?

 

True or false: You should talk to both your family and your doctor when executing a living will.

 

True or false: A letter of last instruction is a document authorizing someone to handle the business affairs of another person prior to death.

 

A letter of last instruction usually contains which of the following?

 

A(n)      trust cannot be changed by the creator (trustor).

 

A(n)       will is a document that enables an individual while well to express the intention that life be allowed to end in case of terminal illness. This is a one word answer.

 

A       trust is a trust whose terms the grantor retains the right to change.

 

A trust can help you avoid       and immediately       your assets to the beneficiaries.

 

True or false: To be valid, the living will must be be signed in the presence of at least two witnesses.

 

Which type of trust is less subject to disputes by disappointed heirs?

 

True or false: An irrevocable trust is one that the trustee cannot change. The only changes can be made by the trustor.

 

The advantages of a testamentary trust are:

 

True or false: A living will is a document that is executed while someone is living that tells how the estate should be distributed after death.

 

Joint ownership is a poor substitute for a will because:

 

The benefits of establishing a trust include:

 

When you die with a will already prepared, it is called being       in the eyes of the law.

 

According to the text, a married couple can give up to what amount of money per person in one year (based on 2018 exclusion amount) without incurring a gift tax?

 

Which of the following are advantages of a living trust?

 

An estate tax is:

 

A testamentary estate is useful if the potential estate is _____.

 

True or false: There is a limit on transfers between spouses during their lifetimes as well as at death with regards to exempting amounts from gift and estate taxes.

 

True or false: Joint ownership is a good substitute for a will.

 

Taxable income for estates and trusts is computed in much the same manner as taxable income for      .

 

If you have not named an executor in your will, the probate court will:

 

No       tax is due on gifts up to $14,000 for 2016 to any one person in any one year.

 

A federal tax collected on the value of a deceased person's property at the time of his or her death is called a(n)       tax.

 

A(n)       tax is levied on the right of an heir to receive an estate.

 

All limits have been removed from transfers between spouses during their lifetimes as well as at death with regards to exempting amounts from       and estate taxes.

 

What is the difference between tax avoidance and tax evasion?

 

Trusts and estates must pay ____ estimated taxes.

 

Your net taxable       is the testamentary net worth after subtracting your debts, liabilities, probate costs, and administrative costs.

 

True or false: To reduce your taxable estate, you can give away assets during your lifetime.

 

The IRS may grant       payments or installments of       taxes owed if reasonable cause can be demonstrated.

 

An inheritance tax is:

 

Tax       is the use of illegal methods to reduce or escape income taxes.

 

Your net taxable estate is calculated as:

 

Life insurance is an economical and reasonably feasible way to pay estate       and provide estate liquidity.

 

Using legal methods to reduce or escape income taxes is called tax      .

 

 

Studies show that about 75% of workers expect to maintain at least the same standard of living during retirement as before retirement, but only ______ have saved for retirement.

 

According to the text, 75% of workers expect to live as well as, if not better than, they do now when they retire, but only 20% have ____.

 

Also called an equity conversion, a       annuity mortgage involves using the home as collateral to buy an annuity for the borrower from a life insurance company that will provide current income.

 

The use of an emergency fund during retirement is for       situations that arise.

 

True or false: Your work-related expenses, such as driving back and forth to work, will be lower or eliminated during retirement.

 

True or false: The Social Security office will require you to provide proof of your age to apply for Social Security benefits.

 

True or false: If your employer is a tax-exempt institution such as a hospital, university, or museum, then the salary reduction plan is called a Section 403(b) plan.

 

True or false: You can borrow from your Roth IRA.

 

Some retirement planning experts suggest that you start retirement planning while you are:

 

With respect to your federal income taxes, which one of the following may you have to do during retirement, even if you did not have to do so prior to retiring?



What happens to your Social Security income if you retire early at age 62 instead of 65?

 

Jeremiah Brown has been making contributions into an individual retirement account for his retirement. His contributions are not tax deductible but his earnings accumulate tax free. What type of individual retirement account does he have?

 

Sam Waterston has been making contributions into an individual retirement account to help pay for his children to go to college. Which type of account is he most likely using?

 

Social Security covers approximately what percent of all U.S. workers?

 

In a reverse annuity mortgage, the lender pays the homeowner a fixed amount per month, and the mortgage principal is repaid to the lender _____.

 

True or false: The use of an emergency fund during retirement is for unexpected situations that arise.

 

If you work for a nonprofit or the government, you can take advantage of tax-sheltered plans, such as Section 457 and 403(b) plans, which lower your taxable       by the amount of your annual contribution.

 

Your right to at least part of the benefits accrued under a pension plan is called      .

 

Under a defined-benefit plan, the plan's actuary determines the annual employer contribution.

 

Vesting means:

 

True or false: A plan that specifies the benefits the employee will receive at the normal retirement age is called a defined-contribution plan.

 

A rollover IRA is a(n)       IRA that accepts distributions from a retirement plan or from another      .

 

Which of the following are rules of the education IRA?

 

To avoid the mandatory 20% federal income withholding, rollover of a retirement account balance must be made directly to a(n):

 

The education IRA is also called the:

 

A(n)       is a contract that provides an income for a certain number of years or for life.

 

Which of the following types of people should be investing in an annuity?



Which of the following are the disadvantages of Social Security as a source of retirement income?



The building of an estate is done through:

 

The need to organize and plan your estate is especially great when you are       to       years away from retirement.

 

Retirement planning involves both and financial components.

 

True or false: Retirement planning includes two components: emotional and financial.

 

Most Americans need to expect to spend between 16 and years in retirement.

 

One of the first steps involved with retirement planning is estimating your spending needs and adjusting for      .

 

Upon retirement, you might consider selling your house and buying a smaller, more easily maintained house to decrease your ____________.

 

True or false: You should plan to spend 10 to 15 years in retirement.

 

Two strategies with regards to life insurance that may be employed to make retirement affordable involve drawing on the cash value and reducing the payments by reducing the value.

 

The financial decisions related to housing as you try to maximize current income and prepare for retirement might include:

 

For what reasons is financial planning for retirement critical?

 

Reducing the face value of your life insurance will reduce your ____.

 

Based on the U.S. Bureau of Labor Statistics report, retirees spend more of their income than workers for which of the following?

 

Work expenses, such as the cost of travel, lunches, and pension contributions, will not be incurred after retirement.

 

Based on U.S. Bureau of Labor Statistics, which of the following is true?

 

Expenses that may increase as a result of retirement include recreation, health insurance, and care.

 

According to the text, the expenses that may be lower or eliminated during retirement include (found in discussion of retirement living expenses):

 

The expenses that may increase as a result of retirement include:

 

When you retire, some living expenses may be reduced, such as work-related expenses, clothing, and federal taxes. This is a one word answer.

 

Which of the following expenses will probably be incurred during retirement?

 

True or false: Social Security provides income for retirement, disability, and survivors.

 

Social Security provides more benefits than just retirement protection, including survivors' and benefits to persons.

 

True or false: During retirement, Social Security payments are tax free.

 

True or false: Social Security payments are increased annually based on the average cost of living increases for the prior three years.

 

Up to % of your Social Security benefits could be subject to federal income tax if your adjusted gross income exceeds a certain amount.

 

Which of the following best describes how the annual increase in Social Security benefits works?

 

The two most important initial questions to ask about a private pension plan are:

 

With a money- pension plan, the employer promises to set aside a certain amount of money for you each year.

 

In a stock bonus plan, your employer's contribution is used to buy stock in your company, which is held until you _____.

 

Private pensions ____, so you should ask questions about your employer's plan.

 

A defined contribution plan in which your employer promises to set aside a certain amount for you each year is called a:

 

With a bonus plan, your employer's contribution is used to buy shares of your employer's stock, which is held in until you retire.

 

The move by most companies to - plans has forced employees to take more responsibility for retirement.

 

Vesting is:

 

Some pension plans allow portability, which enables you to carry earned benefits from one _____ plan to another's.

 

True or false: Many companies are discontinuing defined-benefit plans and moving toward defined-contribution plans, which shifts more responsibility to the company for providing retirement benefits.

 

A feature called plan allows you to carry earned benefits from one employer's pension plan to another when you change jobs. This is a one word answer.

 

Which of the following investments are prohibited from being held in an IRA?

 

From the list below, select those investments than can be held in an IRA.

 

Which plan's retirement payments are determined by the employer?

 

A spousal IRA lets you contribute up to the same amount as you can to your own IRA for your _____ spouse if you file a joint tax return.

 

A spousal IRA lets you up to the same amount as a traditional IRA for your spouse if you file a joint tax return.

 

Which of the following are rules of an SEP-IRA?

 

A SEP-IRA is the simplest type of retirement plan if you are fully or partially ___.

 

The IRA that has contributions that are not tax deductible is a

 

The amount of your required minimum distribution from your retirement plan (starting at age 70.5) is based on your expectancy at the time of the distribution.

 

Which of the following are the advantages of Social Security as a source of retirement income?

 

Which pieces of advice would financial planners and estate attorneys generally offer single parents and other single persons?

 

True or false: An estate is everything you own.

 

It is critical to take to ensure that your beneficiaries will have the information and knowledge needed to survive emotionally and financially when you die.

 

With many nontraditional households as a result of divorces, e.g., unmarried couples, single parents, which of the following is likely true?

 

Building of an estate is done through savings,, and insurance.

 

A will must be written in sound judgment and capacity to be valid.

 

Probate is the legal procedure of proving a will or .

 

Which of the following is not a type of will?

 

The purpose of an executor is to ensure that your estate is distributed according to your .

 

A will leaves everything to the spouse. This is also called an "I love you" will.

 

The four types of wills are:

 

The simple will is not appropriate for:

 

Adjusted gross estate is calculated as gross estate minus and costs.

 

A will is often called an "I love you" will and is sufficient for smaller estates. This is a one word answer.

 

A(n)       will is one that is handwritten.

 

A simple will cannot be used to pass estate assets on to anyone other than a(n)      .

 

The formula for adjusted gross estate is:

 

The drawback to a holographic will is that it is:

 

The advantages of naming your own executor include that:

 

One of the advantages of naming your own executor is that you prevent delays in the       of your property.

 

What is the name of the document that modifies provisions in an existing will?

 

Which of the following responsibilities are involved when an executor takes control of assets?

 

A(n)       is a document that modifies provisions in an existing will.

 

A(n)       will is a document that dispenses emotional and spiritual wealth to heirs.

 

A(n)       is a legal arrangement through which one's assets are held by a trustee.

 

An ethical will is ______.

 

A fee for administering a trust is usually based on the       of the assets in the trust.

 

A credit-shelter trust allows ______ to avoid federal estate taxes.

 

A living trust becomes _____ upon the death of the trustor.

 

A testamentary trust is established by your ____ and becomes effective upon your _____.

 

Which type of trust allows married couples to leave everything to each other tax free?

 

A(n) trust is created during the trustor's (creator's) lifetime and provides benefits during the trustor's lifetime.

 

A(n) trust is established by the creator's will and becomes effective upon his or her death.

 

Newly acquired property or property whose title has not been transferred to the estate before death will be transferred if you have written a ______.

 

Which of the following assets avoid probate and estate taxes?

 

The purpose of a pourover will is to:

 

Any property that has been acquired by either spouse during marriage is called property.

 

True or false: If you and your spouse own property as joint tenants with right of survivorship (JT/WROS), the property is considered to be owned 50-50 for estate tax purposes.

 

Which of the following assets will avoid probate?

Annual exclusion gifts



Bob and Vikki own a property as tenants in common, with each owning 50% of the property. Upon Bob's death, how much of the property will belong to Vikki?

 

Bob and Vikki are a married couple with $250,000 in assets. $100,000 of their assets were inherited by Vikki when her uncle died. They live in Nevada, which is a community property state. How much of their assets are included in Bob's estate?

 

If you and your spouse own property as tenants with right of survivorship, the property is considered to be owned 50-50 for estate tax purposes.

 

If you and your spouse (or anyone else) own property as in common, each individual is considered to own a proportionate share for tax purposes and only your share is included in your estate.

 

Life insurance proceeds are from income tax and from probate.

 

When you die with a will already prepared, it is called to die .

 

Which of the following are true with regards to how life insurance proceeds are treated?

 

The lack of estate liquidity can result in a financial on heirs as they scramble to find the funds to pay the costs of the estate.

 

If total assets are $1,000,000 and liabilities are $400,000, what would be the taxable estate if probate costs are $4,000 and administrative costs are $10,000?

 

Estate is having enough cash to pay taxes and costs without selling assets or borrowing heavily.

 

Estate liquidity is: