Financial Planning Final
This is the final I used for my financial planning class at UC Berkeley. Good Luck! If I get enough inquiries, I'll provide the answers to see how well you did.
1. Explain a Q tip trust
2. An estate is worth $1,500,000. Assuming the owner is single, what is the California probate fee with a will.
3. Describe a charitable remainder trust.
4. A young couple with limited income and two children ages 4 and 8 are approached to buy insurance. What type should they consider. Give reasons
5. Explain the similarities and differences between a power of attorney and a Durable power of attorney. What is a major problem with either.
6. An individual gives away $15,000 this year to five different people and $100,000 to another. What gift tax computations take place while alive. What computation takes place after death.
7. What is a problem with a computer generated financial plan.
8. An individual is calculating the need for insurance between the ages of 40 to 65. Budget is $50,000 and the rate of return on investments is 8% and inflation is 6%. How much do they need for this time frame.
9. Give three reasons why trust packages might not be any good.
10. The deviation graphs below represent two investment portfolios both returning
10%. Which is better- A or B and why.
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11. Name at least three problems with the use of a will.
12. Explain re-enter rates on a term insurance policy.
13. Explain and comment on three major differences between a universal policy versus a whole life policy.
14. Explain the Crummey power use with life insurance trusts.
15. A doctor is reviewing two disability polices. He has a large cash emergency fund. Explain two issues he should consider in the purchase.
16. Explain a joint life annuity at 75% survivor with 15 year certain.
17. What should a person review in the use of a corporate trustee.
18. Although clients may like referrals to insurance agents, stock brokers, financial planners, etc. there is a major downside in their use. What is the problem with referrals.
19. Why might an elderly person with a large family indicate that certain children trustee(s) of their estate be paid trustees fees.
20. A retiree is 72 years of age and owns a $175,000 home with a $47,372 mortgage. He and his wife are seeking a reverse annuity mortgage loan. Name two major problems they will encounter.
21. Comment on active versus passive management by a broker/adviser on an investment or portfolio.
22. Most owners of large estates consider the use of second to die policies in order to pay off estate tax. What else might these same individuals consider and why? Show numbers/verify
23. A residential rental property is purchased for $400,000 with land valued at 20%. It is sold 5 years later for $400,000. What is the taxable profit? Show numbers.
24. A couple have two pieces of real estate with basis of $200,000 and $300,000 and worth of $450,000 and $600,000 respectively. The title is held as joint tenancy. Assuming one dies and the other sells the property immediately thereafter, what is the tax consequence in the 33% bracket. What is the tax consequence if title is held as community property.
25. An woman age 70 is contemplating long term health care insurance. She had a previous history of minor heart fluctuations. Detail and explain what type of policy she should consider and why. Include at least four major issues of long term care.
26. An individual, age 86, is planning to give $10,000 cash to her nephew
to help for college. She has a large estate of appreciated stock purchased
many years in the past. College expenses are $30,000 with $13,900 representing
tuition. What should she do.
If, as a reader on the WEB, you got 70% right, congratulations. By the same token, a C- is nothing to be comfortable with when that person is doing your planning.
27. An single individual, 35 years of age, has $100,000 to invest. Show how
you would allocate funds and indicate why. 2 pts.