Discuss the taxability of the different types of assets.Are some tax-preferred assets upon bequeath, and are there non-tax benefits to the cash?
Many years passed after Sarah took your advice. At 65, she is getting ready to retire. She has $1m in a 401 (k) plan, a house worth $300k, and a cash savings account worth another $500k. She has decided that she has gone far too long without a will. She again asks your advice as to what she should bequeath to her husband and two children. The problem is that one child is in the Peace Corp. and makes very little money, whereas the other child is a wealthy attorney. She does not know their marginal tax rates, but she has heard the attorney say she’s paying too much in taxes.
• Discuss the taxability of the different types of assets.
• Are some tax-preferred assets upon bequeath, and are there non-tax benefits to the cash?
• Come up with a plan that helps “equalize” the after-tax receipts for her two children and husband . This question does not need to be a memo.