Bill, age 47, and Jean, age 44, Short are married, live in the same house, and have
Question:
Bill, age 47, and Jean, age 44, Short are married, live in the same house, and have 2 children Tommy age 24 a full time student living at home and Sally age 17 still in high school.
Bill earns $275,000 per year and has a 401(k)-retirement plan with $1,750,000 in the plan. He adds $23,000 per year to the plan. He carries $750,000 in whole life insurance. He expects to inherit a farm from his parents valued at $22,000,000 and approximately $10,000,000 in cash and stock and other assets.
Jean is self-employed and earns $200,000 per year and has a Roth IRA containing $875,000 and she plans to make the maximum yearly contribution in the future. She carries $750,000 whole life insurance. She expects to inherit a home valued at $475,000 and stocks and bonds worth $1,450,000.
Bill and Jean meet with you and want you to answer tax planning questions for them:
- What would the tax consequences be if Bill and Jean died in an accident today under current tax law?
- What could the possible tax consequences be if currently proposed tax hikes are enacted?
- What estate planning should be done today to protect the estate for Tommy and Sally?
Cornerstones of Managerial Accounting
ISBN: 978-0176530884
2nd Canadian edition
Authors: Maryanne M. Mowen, Don Hanson, Dan L. Heitger, David McConomy, Jeffrey Pittman