Case 3 Victor and Maria Update Their Estate Plans Since retiring earlier this year, Victor and Maria have found that their assets amount to approximately $800,000, made up of the following: Victor’s half-interest in their home ($90,000), his tax-sheltered pension plan ($144,000), his stock ($56,000), his personal property ($50,000), Maria’s half-interest in their home ($90,000), the inherited home from her mother

($120,000), her tax-sheltered pension plan ($112,000), the present value (obtained from Victor’s employer) of the survivors benefi ts under her husband’s defi ned-benefi t pension plan

($60,000), personal property ($50,000), and her zero-coupon bonds ($28,000).

(a) Off er the Hernandezes advice about how each might establish a durable power of attorney for fi nances.

(b) Should both Victor and Maria have living wills and a health care proxy? Why or why not?

(c) Victor purchased his $100,000 term life insurance policy through his employer, and he has been paying on his privately purchased $50,000 whole life insurance policy for many years (which now has a cash value of $30,000).

Maria is listed as the benefi ciary on both policies.

Assuming that Victor owns both policies, what advice can you off er regarding ownership of the two policies?

(d) After adding up the value of the estate, what is the likelihood of having to pay federal estate taxes if Victor dies?

(e) Off er Victor and Maria some suggestions on how to ease the transfer of assets to their adult children and grandchildren.