FP5eQCh19 - Problems with Guided Answers by Robert Monahan...

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Financial Planning in Australia 5e Problems Ch19 Page 1 Problems with Guided Answers by Robert Monahan and Michael Perkins CHAPTER 19: Estate Planning – Core Principles and Practice 1 Brian has always been one to not spend money unless he absolutely has to. This is especially so when it comes to people he terms ‘overpaid and underworked’, so it was natural that he would spend just $49.95 on a Will Kit from an online business rather than seek professional advice for his estate planning. He is married with three daughters, two of whom are over 21 years of age, with the third, Kelly, only 12. When he wrote his will, he made it such that his wife inherits everything, then the three children equally upon reaching age 21. What problems do you foresee in the way Brian has made his will? If Brian and his wife were to both die together in a motor vehicle accident, for example, their estates pass to the daughters; however, there is no provision in the will for Kelly’s care and education. He has not nominated a guardian(s) for minor children. Who could she be affected and why? Kelly could be adversely impacted by her sisters’ entitlements to call on their respective one-third of their parents’ estates if both parents were to die now. It could be that the two older sisters claim their entitlements, because they have reached age 21, leaving just one-third of the estate to generate income for Kelly’s care and education. Kelly’s ongoing care is of concern — who is going to become her guardian if her parents die before she is an adult? 2 Sybil and Bruce married after the deaths of their respective first spouses. They are in their late 70s and purchased a home together as joint tenants. The fact that it was their second marriage was not identified by the person carrying out the conveyance for the house purchase. Bruce has four children, all in their late 40s, and Sybil has three daughters, also in the late 40s. Bruce’s contribution to the house purchase was just $50,000 — as much as he could contribute — and Sybil contributed the remaining $425,000 following sale of her home. What issues arise for beneficiaries? If, for example, Bruce were to predecease Sybil, then ownership of the house automatically passes to Sybil. There is in this case no guarantee that Bruce’s © 2013 Reed International Books Australia Pty Limited trading as LexisNexis. Permission to download and make copies for classroom use is granted. Reproducing or distributing any material from this website for any other purpose requires written permission from the Publisher.
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