Stanley and Janet are married. Stanley has assets in his own name valued at
$10
million, and Janet has assets in her own name valued at
$12
million. They both have wills leaving all of their assets to the other. Neither has made any lifetime taxable gifts. Stanley dies this year. Which of the following statements regarding the transfer tax consequences of Stanley's death is (are) CORRECT?
Stanley's estate owes no estate tax.
Stanley has used none of his lifetime applicable exclusion (exemption) amount.
Janet potentially has a lifetime applicable exclusion amount that is double this year's exclusion, which she can apply to lifetime taxable gifts or to estate tax due at her death.
Stanley has overqualified his estate.
1 and 2
4 only
1, 2 and 3
1,2,3 and 4
Question 9 (Mandatory) (1 point)
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Ed and Maria are a married couple. Bringing along their adult children, they consult a financial advisor for estate planning advice. In their initial meeting, Ed and Maria explain that this is a second marriage for both of them and that their children are all from prior marriages. Ed has assets valued at more than
$20
million in his name alone, while Maria's assets are valued at roughly
$200,000
. Ed says that when he dies, he wants to leave Maria the income from his assets for life, but he feels strongly that the principal should pass to his children at Maria's death. Maria states that she helped Ed accumulate his wealth during their marriage and that she should be entitled to more than the income from the assets when he dies. Ed's children do not believe Maria needs the income from all of their father's assets during her life and have encouraged their father to leave her a lump sum of
$1
million instead of a life income. Which of the following actions should the financial advisor take in addressing Ed and Maria's needs?
◻
Establish who the client is before proceeding further with the engagement.
Ask Ed and Maria to submit financial statements showing their net worth and income before making any further recommendations.
Recommend that Ed execute a will implementing a QTIP trust.
Recommend that Ed execute a will leaving his entire estate to his children and advise Maria that she can challenge the will if she wants.
Ed and Maria are a married couple. Bringing along their adult children, they consult a financial advisor for estate planning advice. In their initial meeting, Ed and Maria explain that this is a second marriage for both of them and that their children are all from prior marriages. Ed has assets valued at more than
$20
million in his name alone, while Maria's assets are valued at roughly
$200,000
. Ed says that when he dies, he wants to leave Maria the income from his assets for life, but he feels strongly that the principal should pass to his children at Maria's death. Maria states that she helped Ed accumulate his wealth during their marriage and that she should be entitled to more than the income from the assets when he dies. Ed's children do not believe Maria needs the income from all of their father's assets during her life and have encouraged their father to leave her a lump sum of
$1
million instead of a life income. Which of the following actions should the financial advisor take in addressing Ed and Maria's needs?
Establish who the client is before proceeding further with the engagement.
Ask Ed and Maria to submit financial statements showing their net worth and income before making any further recommendations.
Recommend that Ed execute a will implementing a QTIP trust.
Recommend that Ed execute a will leaving his entire estate to his children and advise Maria that she can challenge the will if she wants.