Meg owns and operates a plastic manufacturing company, and Maynard is a teacher. Maynard and Meg’s principal is stock in the family business (Meg owns eighty percent of the stock and Maynard owns the other twenty percent); the business was recently appraised at $3.2 million. They have about $1 million in other assets, all jointly held. Meg has four children from a previous marriage: Tom (age 26, a lawyer), Martha (age 24, a manager in the family business), and twins Hal and Al, college students, age 20. Both Martha and Hal have indicated an interest in remaining with the family business.Neither Maynard no Meg has made any lifetime transfers. They desire for their children to inherit all their properties eventually. Since Meg is ten years older than Maynard, she would like to insure that he has enough income to live on should he survive her, and she also would like to ensure that her children receive the entire estate after he dies. They would also eventually like to leave a gift of $500,000 to State University to fund a scholarship program.Assume as a CPA and tax planner you have been asked by Meg and Maynard to establish a family financial plan that would accomplish their wishes. List the basic steps that you would suggest they take in order to accomplish their wishes. In other words what type of plan would you suggest?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Meg owns and operates a plastic manufacturing company, and Maynard is a teacher. Maynard and Meg’s principal is stock in the family business (Meg owns eighty percent of the stock and Maynard owns the other twenty percent); the business was recently appraised at $3.2 million. They have about $1 million in other assets, all jointly held. Meg has four children from a previous marriage: Tom (age 26, a lawyer), Martha (age 24, a manager in the family business), and twins Hal and Al, college students, age 20. Both Martha and Hal have indicated an interest in remaining with the family business.

Neither Maynard no Meg has made any lifetime transfers. They desire for their children to inherit all their properties eventually. Since Meg is ten years older than Maynard, she would like to insure that he has enough income to live on should he survive her, and she also would like to ensure that her children receive the entire estate after he dies. They would also eventually like to leave a gift of $500,000 to State University to fund a scholarship program.

Assume as a CPA and tax planner you have been asked by Meg and Maynard to establish a family financial plan that would accomplish their wishes. List the basic steps that you would suggest they take in order to accomplish their wishes. In other words what type of plan would you suggest?

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Computation of Taxable Income
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education