Assume the Wendy and Will Wolverine fact pattern. Will Wolverine dies at age 45, leaving his 403(b) plan to his spouse, Wendy, who is also age 45 and the sole primary beneficiary of the account. Will was also carrying the health insurnace fo rthe family. Will's salary was $125,000.

Again, their assets at the time of Will's death are as follows: House (entireties, net of mortgage) $350,000.00 Cash and Investments (JTWROS) 225,000.00 Wendy's401(k)/ProfitSharingPlan 350,000.00 Will's 403(b) Plan 475,000.00 Wendy's Life Insurance 500,000.00 Will's Life Insurance 250,000.00 *** TotalAssets $2,150,000.00

Wendy feels she ought be able to stay working part time, and pick up her family health benefits. Yet, as a PT employee she may need to pay for the family component of the health insurance which may be as much as $1000/mo. Therefore, she thinks she will need additional funds above her salary to support the household of up to 50K/ yr until the kids are done with school. Having said that , she isnt willing to fully invade the $225,000 JTWROS investment account to make ends meet, but can use some of that. The stocks in that account, now worth 200K, have a cost basis of 100K. Therfore she will ahve to start selling off shares for income. Their plan was to leave that whole investment account to the kids in the future, as an inheritance What happens to that investment account after Will's death? First ASSUME Will DID NOT purchase additional life insurance. Given his existing policy which only provides half Wendy's needs ( 250K / 10 = 25K/yr for 10 years) , where can Wendy get the additional annual funds she needs? What are Wendy's options with regard to Will's 403(b)? What if Will purchased more life insurance; the amount you recommended in part 1? Does that change how Wendy treats Will's 403B? How does the tax impact of Wendy using life insurance to fund teh household liabiity vs any other funding source differ?