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Question
Your parents own a vacation home and find it more difficult to spend as much time there as they once did. They are thinking about continuing to use it as a vacation retreat but also want to periodically rent it and use it as an investment. Discuss the issues they should consider when making this decision.Answer
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Related questions
Q:
A trust is a legal arrangement through which a trustee holds your assets for your benefit or that of your beneficiaries.
Q:
In a revocable trust, you forfeit the right to end the trust or change its terms during your lifetime.
Q:
A living will is a good substitute for a traditional will.
Q:
Once you retire, the first step in stretching your retirement income is to make sure that you are:
A. contributing to Social Security.
B. covered by an employer pension plan.
C. contributing to a 401(k) plan.
D. saving funds in an IRA.
E. receiving all of the income to which you are entitled.
Q:
You can borrow from your Roth IRA.
Q:
Because of their actuarial aspects, defined-benefit plans tend to be more-complicated and more expensive to administer than defined-contribution plans.
Q:
In a direct real estate investment, the investor holds legal title to the property.
Q:
Most gold brokers require a minimum order of how many bullion coins?
A. 5
B. 10
C. 25
D. 50
E. There is no minimum order.
Q:
Ted pays $4,500 in real estate property taxes and is in the 28 percent tax bracket. What is the value of this federal tax deduction?
A. $4,500.
B. $3,240.
C. $2,500.
D. $1,260.
E. $500.
Q:
If closing costs of $1,400 are associated with the refinance of a mortgage that would reduce the monthly payment from $980 to $870, it would take approximately ____ months to cover these costs.
A. 6
B. 9
C. 13
D. 17
E. 22
Q:
Michelle Duncan wants to know what price home she can afford. Her annual gross income is $45,000. She owes $750 per month on other debts and expects her property taxes and homeowners insurance to cost $250 per month. She knows she can get a 7.5%, 30 year mortgage so her mortgage payment factor is 6.99. She expects to make a 20% down payment. What is Michelle's affordable home purchase price? Round your answer to the nearest $100.
A. $76,000
B. $60,800
C. $304,000
D. $42,500
E. $254,800
Q:
Which of the following would qualify a person for an exemption when computing taxable income?
A. Mortgage interest
B. A tax shelter
C. A dependent
D. Charitable contributions
E. Passive income
Q:
Michele Walsh is considering an additional charitable contribution of $2,000 to a tax-deductible charity, bringing her total itemized deductions to $16,000. If Michele is in a 28 percent tax bracket, how much will this $2,000 contribution reduce her taxes?
A. $0
B. $560
C. $1,600
D. $2,000
E. $4,480
Q:
Opportunity costs refer to time, money, and other resources that are given up when a decision is made.
Q:
Which statement is not true about a formal will?
A. It is usually prepared without an attorney's assistance.
B. It may be typed.
C. It may be on a preprinted form.
D. You must sign it in the presence of two witnesses.
E. It must also be signed by the witnesses.
Q:
A simple document stating that anything you may have neglected to place in your trust during your lifetime should be placed in it at your death is called a:
A. letter of last instruction.
B. ethical will.
C. prenuptial agreement.
D. codicil.
E. pourover will.
Q:
The American Taxpayer Relief Act of 2012 provides a permanent gift and estate tax exemption of how much for individuals?
A. $2.0 million
B. $4.5 million
C. $5.25 million
D. $6.75 million
E. $8.0 million
Q:
George Smith worries that his deteriorating health is going to make it difficult for him to conduct his day-to-day business. He wants to grant his nephew, Brandon Smith, the ability to act on his behalf. To do this, what document would he most likely need?
A. Letter of last instruction
B. Durable power of attorney
C. Will
D. Revocable trust
E. Irrevocable trust
Q:
As of 2013, what is the maximum yearly amount that an individual can give as a gift without incurring gift tax liability or having to report the gift to the IRS?
A. $5,000
B. $14,000
C. $15,000
D. $20,000
E. $25,000
Q:
Under what type of ownership is the property considered owned 50-50 for estate tax purposes and passed automatically to your spouse at your death?
A. Tenants in common
B. Tenancy by the entirety
C. Joint tenants with the right of survivorship
D. Tenancy by seniority
E. Tenancy by default
Q:
Brenda Johnson has used a preprinted form that she got from the internet to create her will. What type of will has she created?
A. Holographic
B. Formal
C. Statutory
D. Casual
E. Living
Q:
James Fitzwater has created a will that leaves exactly $2 million to his wife. What type of will has James created?
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. Living will
Q:
Benjamin Wiley is married and has assets totaling $7 million. What type of will would most likely result in the lowest overall amount of federal estate taxes? Assume the exemption amount is $3 million.
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. Living
Q:
You should review your will if:
A. you move to a different state.
B. you have sold property mentioned in the will.
C. the size and composition of your estate has changed.
D. you have married, divorced, or remarried.
E. you have done any of the things listed in the other answers.
Q:
A handwritten will is called a(n):
A. holographic.
B. formal.
C. statutory.
D. exemption trust.
E. informal.
Q:
Which one of the following wills leaves everything to your spouse?
A. Simple
B. Traditional marital share
C. Exemption trust
D. Stated dollar amount
E. Living
Q:
Grady Perdue has assets worth $1,500,000 and has written a legal document that specifies that all of his money go to his children. After he dies, there is a legal process to determine whether his document specifying how his assets be divided is valid. This is also the legal process by which his executor manages and distributes his property. What is this legal process called?
A. Estate
B. Will
C. Trust
D. Probate
E. Terms of distribution
Q:
Gerald Wilkins owns a home worth $250,000, a car worth $15,000, various investments worth $600,000 and other personal assets worth $25,000. What are these things to Gerald?
A. Estate
B. Will
C. Trust
D. Probate
E. Liabilities
Q:
Which of the following is an important document needed for estate planning?
A. Your driver's license
B. Your transcript from college
C. Your birth certificate
D. Your birthday cards
E. All of these documents are needed in estate planning.
Q:
Which one of the following statements is correct?
A. Estate planning frequently involves the use of life insurance.
B. Most people do extensive estate planning.
C. Most people think they will live forever.
D. People should not worry about estate planning until they are age 65.
E. Estate planning is really only necessary if you are wealthy.