Question #35 of 85 Question ID: 1251806Your client, age 65, has a gross estate valued at $7,000,000, which includes life insurance on his life with a death benefit of $750,000 and payable to his wife, age 35, as the named beneficiary. His primary objectives are:To minimize estate taxes on his deathTo be assured that his son from a previous marriage receives part of the life insurance proceedsTo minimize the income tax burden on his beneficiariesThe insurance technique that is most appropriate to enable your client to achieve all of his objectives is to have the death benefit A)left with the insurer to be paid to his wife under an interest-only option. B)paid to a trust that gives his wife a general power of appointment over the funds. C)paid to a QTIP trust that restricts his wife’s right to the corpus and which gives the remainder to his son. D)paid to his wife under a fixed-income option for the duration of her life.

For the given question option number C will be right. The explanation can be as follows:

Answered: Question #35 of 85 Question ID:…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question #35 of 85

Question ID: 1251806

Your client, age 65, has a gross estate valued at $7,000,000, which includes life insurance on his life with a death benefit of $750,000 and payable to his wife, age 35, as the named beneficiary. His primary objectives are:

To minimize estate taxes on his death
To be assured that his son from a previous marriage receives part of the life insurance proceeds
To minimize the income tax burden on his beneficiaries

The insurance technique that is most appropriate to enable your client to achieve all of his objectives is to have the death benefit

left with the insurer to be paid to his wife under an interest-only option.

paid to a trust that gives his wife a general power of appointment over the funds.

paid to a QTIP trust that restricts his wife’s right to the corpus and which gives the remainder to his son.

paid to his wife under a fixed-income option for the duration of her life.

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