14. Françoise has just inherited $90,000. In the event of her own death, she would like to leave this money to ensure the financial security of her son MaximeHe is 18 years old and recently entered college to study philosophy. Françoise is a self-employed landscaper and snow-removal contractor. She recentlyhad to take out loans to upgrade her equipment. Françoise is not sure whether she should invest her inheritance in a segregated fund with Maxime as thebeneficiary or build an equity portfolio with better returns. Her priority is to provide for her son's future.If she were to one day declare bankruptcy, would the two investments Françoise is considering be protected from creditors?Only the segregated fund would be protected.Only the equity portfolio would be protected.O Both investments would be protected.ONeither investment would be protected.Choose 1 option

Segregated funds, also known as seg funds, are a type of investment fund offered by insurance…

Answered: 14. Françoise has just inherited…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Dave has $30,000,000 in assets and is 63 years old. He is married to Olivia. They have never made any gifts before. Assume a personal lifetime exclusion of $11,000,000. a) Assume he makes a gift of $23,000,000 to his extremely worthy nephew Brian. What are the exact (use numbers) tax consequences of this transactions to Dave and Brian? b) He gives $1,000,000 to Anne-Marie. c) Dave and his wife die while skiing near his vacation home in the snow. They have $7,000,000 at their time of death. After their somber half-million dollar funeral, the family deals with the estate tax. What is the estate tax paid? d) Assume all the same facts from A, B, and C, but Dave’s will also states that he would rather die than pay any estate tax. You are his tax advisor. How would you ensure he pays nothing if his wife is not willing to consider divorce? Use specific numbers.
(Case Study Question) Henry's oldest son has few financial resources. Henry would like to contribute annually to a trust, with his son only receiving the trust income. The remainder of the trust would go to his grandchildren (his son's children) at his son's death. Henry wants his son to receive all the earnings from the trust with no restrictions. He realizes that his son will likely squander trust income he receives but wants to otherwise protect his son from his creditors. Which of the following trusts would you recommend that Henry establish for the benefit of his son? A) An irrevocable trust, including spendthrift provisions B) A support trust C) A Section 2503(b) trust
Kathleen, age 56, works for MH Incorporated in Dallas, Texas. Kathleen contributes to a Roth 401(k), and MH contributes to a traditional 401(k) on her behalf. Kathleen has contributed $30,000 to her Roth 401(k) over the past six years. The current balance in her Roth 401(k) account is $50,000 and the balance in her traditional 401(k) is $40,000. Kathleen needs cash because she is taking a month of vacation to travel the world. Answer the following questions relating to distributions from Kathleen's retirement accounts assuming her marginal tax rate for ordinary income is 24 percent. a. If Kathleen receives a $10,000 distribution from her traditional 401(k) account, how much will she be able to keep after paying taxes and penalties, if any, on the distribution? (answer is not 6200)
Ashley Panda lives at 1310 Meadow Lane, Wayne, OH 43466, and her Social Security number is 123-45-6777. Ashley is single and has a 20-year-old son, Bill. His Social Security number is 111-11-1112. Bill lives with Ashley, and she fully supports him. Bill spent 2019 traveling in Europe and was not a college student. He had gross income of $4,655 in 2019. Bill paid $4,000 of lodging expenses that Ashley reimbursed after they were fully documented. Ashley paid the $4,000 to Bill using a check from her sole proprietorship. That amount is not included in the items listed below. Ashley had substantial health problems during 2019, and many of her expenses were not reimbursed by her health insurance. Ashley owns Panda Enterprises, LLC (98-7654321), a data processing service that she reports as a sole proprietorship. Her business is located at 456 Hill Street, Wayne, OH 43466. The business activity code is 514210. Her 2019 Form 1040, Schedule C for Panda Enterprises shows revenues of $315,000,…
Leon has a gross estate estimated at $14.3 million. He is not married but does have two adult children who he wants to receive all of his estate. Leon is the sole owner of income-producing real estate valued at $900,000. He currently depends on the income produced by this real estate to maintain his standard of living. However, Leon is certain that when he retires in 10 years, at age 65, he will no longer need this income due to a generous income from a defined benefit retirement plan. Leon's financial planner has told Leon that his estate could face a severe liquidity crisis if in retirement. In which one of the following trusts would it be best for Leon to place his income-producing property in order to improve his estate's liquidity position in retirement? A)A revocable trust to last for Leon’s lifetime, with all trust assets to be distributed to his children at his death B)An irrevocable trust to last for 10 years that will annually pay Leon income at the trustee’s…
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45. Michelle lives in a state that allows use of a beneficiary deed to transfer property at death. She owns her home in her sole name. She wants this asset to go to Bertram, her only child, at her death. Which one of the following is a correct statement regarding use of a beneficiary deed in this situation? A) A beneficiary deed can only transfer personal property at death. B) She will incur gift tax if she records the deed. C) If she uses a beneficiary deed, she will not be able to live in the house until her death. D) If Bertram predeceases her, Michelle will be able to name another beneficiary to receive title to the home at her death.

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