Frank is a widower. He has a $15.3 million estate consisting primarily of undeveloped real estate and life insurance. His children are the beneficiaries of his life insurance. His will leaves 30% of probate assets to each of his three children, with the residue to his cousin, James. Frank learned that his estate may have liquidity problems when he dies. Which one of the following techniques is the most appropriate to increase liquidity in Frank's estate? A) Change the beneficiary on his life insurance to his estate B) Transfer existing life insurance policies to an irrevocable life insurance trust with his children as beneficiaries, which allows the trustee to purchase some of the hard-to-sell property from the estate and/or to loan funds to the estate C) Place the undeveloped real estate in a qualified terminable interest property (QTIP) trust and make the QTIP election D) Amend his will to place the undeveloped real estate in an power of appointment trust
Frank is a widower. He has a $15.3 million estate consisting primarily of undeveloped real estate and life insurance. His children are the beneficiaries of his life insurance. His will leaves 30% of probate assets to each of his three children, with the residue to his cousin, James. Frank learned that his estate may have liquidity problems when he dies. Which one of the following techniques is the most appropriate to increase liquidity in Frank's estate? A) Change the beneficiary on his life insurance to his estate B) Transfer existing life insurance policies to an irrevocable life insurance trust with his children as beneficiaries, which allows the trustee to purchase some of the hard-to-sell property from the estate and/or to loan funds to the estate C) Place the undeveloped real estate in a qualified terminable interest property (QTIP) trust and make the QTIP election D) Amend his will to place the undeveloped real estate in an power of appointment trust
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter15: Preserving Your Estate
Section: Chapter Questions
Problem 6FPE
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Frank is a widower. He has a $15.3 million estate consisting primarily of undeveloped real estate and life insurance. His children are the beneficiaries of his life insurance. His will leaves 30% of probate assets to each of his three children, with the residue to his cousin, James. Frank learned that his estate may have liquidity problems when he dies.
Which one of the following techniques is the most appropriate to increase liquidity in Frank's estate?
A)
Change the beneficiary on his life insurance to his estate
B)
Transfer existing life insurance policies to an irrevocable life insurance trust with his children as beneficiaries, which allows the trustee to purchase some of the hard-to-sell property from the estate and/or to loan funds to the estate
C)
Place the undeveloped real estate in a qualified terminable interest property (QTIP) trust and make the QTIP election
D)
Amend his will to place the undeveloped real estate in an power of appointment trust
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