Estate_11th_Ch_11_MC_Solutions.pdf - ESTATE PLANNING 11TH...

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ESTATE PLANNING, 11TH ED. C HAPTER 11 E ND OF C HAPTER M ULTIPLE C HOICE S OLUTIONS 1. The correct answer is d. Because Jack did not list a beneficiary, the death benefit is payable to Jack’s estate and will be distributed per Jack’s will or the intestacy laws of Jack’s state of residency. There is no three-year rule with regard to the initial premium payment of the life insurance policy as listed in option a. 2. The answer is b. Option 1 is correct because Carol’s federal gross estate will not include the death benefit of the life insurance policy on her life owned by Joe because Carol does not possess any incidents of ownership in the policy. Option 3 is correct because when an individual dies owning a life insurance policy on the life of another per- son, the value of the life insurance policy will be included in her federal gross estate. Option 2 is incorrect because Carol’s ownership in the drug store does not change the fact that Carol does not possess any incidents of ownership in the life insurance policy on her life, owned by Joe. The death benefit of a life insurance policy

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