David and Amanda have been married for 25 years. They have two kids who are both...
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David and Amanda have been married for 25 years. They have two kids who are both independent and out of the house. Three years ago, the couple sold their business Retail Inc. to a multinational company. They feel they have more than they require in term of assets and cash flow and have been giving consideration to making donations to their favorite charity; an organization called Paws and Claws that finds homes for dogs and exotic parrots. They were doing some research and came across an article in the Globe & Mail that shed some light on ways how charitable bequests can be made through insurance policies. The couple always had a risk management plan in place but after the sale of the business they are considering using their life insurance policies to plan a charitable gift. They are somewhat confused however as there are different implications to making such bequests and would like to speak to you in order to get some additional information. Below is a list of the insurance policies that the couple own: CSV ($) Policy Owner David David Amanda Amanda Amanda Policy Type 5-year term Universal Life 10-year term Whole Life Universal Life Face Value Today is January 1st. 350,000 450,000 500,000 175,000 200,000 ΝΑ 88,500 ΝΑ 42,000 35,500 Life Insured Amanda David Amanda Amanda David Beneficiary Son Son Estate Daughter Estelle (Friend) Annual Premium 1,500 2,900 1,200 1,800 2,200 Amanda's Whole Life Insurance has an outstanding policy loan totaling $15,000, which she intends to pay back, but she just has not had the time. The couple has come to you to discuss how these donations can become part of their Estate Plan. 2. If David and Amanda decided to complete an absolute assignment of both their term policies and Amanda's universal life policy but continue to pay the premiums indefinitely, calculate their eligible donation amount for the year. (2 marks) 1. 3. If David decides to name Paws & Claws as the beneficiary of his term policy and removes his son as beneficiary, calculate the donation amount in the year of David's death (ignore premiums). (1 marks) 4. What is the best course of action David can take to ensure that he becomes eligible for the donation in the year of death of the life insured (Amanda) on his term life policy? (1 marks) David and Amanda have been married for 25 years. They have two kids who are both independent and out of the house. Three years ago, the couple sold their business Retail Inc. to a multinational company. They feel they have more than they require in term of assets and cash flow and have been giving consideration to making donations to their favorite charity; an organization called Paws and Claws that finds homes for dogs and exotic parrots. They were doing some research and came across an article in the Globe & Mail that shed some light on ways how charitable bequests can be made through insurance policies. The couple always had a risk management plan in place but after the sale of the business they are considering using their life insurance policies to plan a charitable gift. They are somewhat confused however as there are different implications to making such bequests and would like to speak to you in order to get some additional information. Below is a list of the insurance policies that the couple own: CSV ($) Policy Owner David David Amanda Amanda Amanda Policy Type 5-year term Universal Life 10-year term Whole Life Universal Life Face Value Today is January 1st. 350,000 450,000 500,000 175,000 200,000 ΝΑ 88,500 ΝΑ 42,000 35,500 Life Insured Amanda David Amanda Amanda David Beneficiary Son Son Estate Daughter Estelle (Friend) Annual Premium 1,500 2,900 1,200 1,800 2,200 Amanda's Whole Life Insurance has an outstanding policy loan totaling $15,000, which she intends to pay back, but she just has not had the time. The couple has come to you to discuss how these donations can become part of their Estate Plan. 2. If David and Amanda decided to complete an absolute assignment of both their term policies and Amanda's universal life policy but continue to pay the premiums indefinitely, calculate their eligible donation amount for the year. (2 marks) 1. 3. If David decides to name Paws & Claws as the beneficiary of his term policy and removes his son as beneficiary, calculate the donation amount in the year of David's death (ignore premiums). (1 marks) 4. What is the best course of action David can take to ensure that he becomes eligible for the donation in the year of death of the life insured (Amanda) on his term life policy? (1 marks)
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To calculate the eligible donation amount for the year if David and Amanda complete an absolute assignment of their term policies and Amandas universa... View the full answer
Related Book For
Essentials Of Federal Taxation 2019
ISBN: 9781260190045
10th Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
Posted Date:
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