Deck 16: Retirement and Estate Planning

Question 1

What is another word for having a will?

A)Execution
B)Testate
C)Intestate
D)Willstate

Answer 1

Testate

Question 2

_______ is the document that gives another written authority to act on your behalf if you are ill,incapacitated,or unable to manage your own affairs.

A)A letter of intent
B)An estate plan
C)A bypass trust
D)Power of attorney

Answer 2

Power of attorney

Question 3

A 401(k)plan is used to save for ________.

A)college
B)retirement
C)unemployment
D)None of the options are correct.

Answer 3

retirement

Question 4

Which is not a reason to start saving for retirement?

A)Family
B)Sabbatical
C)Change of heart
D)None of the options are correct.

Question 5

Contributions into a Roth IRA are ________.

A)tax-deductible
B)not tax-deductible
C)two for one
D)government matched

Question 6

The Social Security Act was signed into law in 1935 by President Franklin D.Roosevelt and was meant to provide a safety net against poverty brought on by all of these except

A)unemployment.
B)illness.
C)disability.
D)All of the options are correct.

Question 7

Social Security benefits are based on ________.

A)where you live
B)how much you have in retirement savings
C)your average lifetime earnings of your 35 highest years of wages
D)what your company contributes toward your retirement savings

Question 8

What is a retirement plan that a self-employed individual can establish?

A)Individual 401(k)
B)SEP
C)IRA
D)All of the options are correct.

Question 9

Which of the following is not an example of an individual retirement account?

A)Roth 401(k)plan
B)Traditional IRA
C)Roth IRA
D)Spousal IRA

Question 10

When calculating retirement income and Social Security,________.

A)count on Social Security covering your retirement expenses
B)if you have a working spouse,you should both file for Social Security at the same time
C)if you have a working spouse,you should have the spouse with the higher income and better health draw his or her Social Security last
D)if you have a working spouse,you should both file for Social Security as soon as you can while there is still money in the fund

Question 11

While earlier is better,when you ________ ,you should start putting money toward retirement.

A)are born
B)get married
C)get your first career job
D)turn 18

Question 12

To be safe,you need ________ of your preretirement annual salary to live comfortably at retirement.

A)30%
B)50%
C)60%
D)80%

Question 13

If you work for a company that will match $1 for every $2 contributed up to 5% of your salary of $50,000,what is the maximum amount of free money from the company that you can earn this year?

A)$5,000
B)$2,500
C)$2,000
D)$1,250

Question 14

If you work for a company that will match $2 for every $1 contributed up to 5% of your salary of $80,000,what amount do you need to invest to receive the maximum company match?

A)$5,000
B)$2,500
C)$2,000
D)$1,250

Question 15

A spousal IRA is ________.

A)a traditional or Roth IRA established and funded by an individual for his or her spouse
B)a retirement account that allows you to invest pretax income
C)a contribution made with money you have earned after paying your taxes
D)There is no such thing as a "spousal IRA".

Question 16

What is the one requirement to opening a traditional or a Roth IRA?

A)You must have money with which to open the account.
B)You must have earned income.
C)You must be 16 years old.
D)You must have a parent cosign for you.

Question 17

When creating a will,who is the person that will tend to your estate according to your wishes?

A)Tender
B)Perpetrator
C)Executor
D)Lawyer

Question 18

When changing employment,your 401(k)account ________.

A)must stay with your past employer
B)is considered a withdrawal and taxes must be paid on the entire amount
C)can be transferred to another plan administrator or trustee,like a mutual fund company,an IRA,or new employer's plan
D)cannot be rolled over into an IRA

Question 19

Once you start drawing on your Social Security retirement funds,________.

A)your amount is set for life
B)you will receive an adjustment for inflation on your birthday
C)the amount you receive will be recalculated based on your life expectancy and your physician's report of your health
D)you will receive an annual adjustment each January for inflation most years

Question 20

How can you catch up on your retirement savings if you have not met your targeted amount?

A)Put off your date of retirement
B)Contribute more to your current retirement account
C)Plan to continue to work part-time into retirement
D)All of the options are correct.

Question 21

Which of the following items is not of note for tax purposes?

A)The market value of clothing given to Good Will
B)The appraised value of art given to your university
C)Cash given to the Teacher Appreciation Fund
D)The blue book price of a car donated to the Crisis Center

Question 22

In 2016,an individual could give away up to what amount without paying a gift tax?

A)$10,000
B)$14,000
C)$15,000
D)No amount can be given tax-free.

Question 23

A(n)________ is a document that expresses your wishes regarding medical treatment in the event of incapacitation.

A)advance directive
B)durable power of attorney for health care
C)estate plan
D)power of attorney

Question 24

You give $1,000,000 to your college in an irrevocable trust with the stipulation that you receive the earnings from the gift.You are guaranteed an annual 5% return on your investment.What will your income be from your gift?

A)$50,000
B)$100,000
C)$500,000
D)You cannot determine this without knowing your marginal tax rate.

Question 25

What must you do to deduct donations to a political campaign from your taxes?

A)Donate at least $1,000
B)Select a party to support on your tax return
C)Retain the receipt for one year
D)You are not able to deduct donations to a political campaign.

Question 26

Steve died in a car accident.He never had a will made,so he died ________.

A)testate
B)executor
C)intestate
D)attorney of fact

Question 27

A person who has made a legally valid will is ________.

A)intestate
B)testate
C)relaxed
D)impoverished

Question 28

Which of the following is an executor allowed to do?

A)Distribute the assets of the estate
B)Make final decisions on burial details
C)Contradict what is said in the will
D)All of the options are correct.

Question 29

What documents should not be kept in your safety deposit box?

A)Life insurance policies and your will
B)Military services records
C)Divorce papers
D)Birth certificate

Question 30

Which of the following can you not deduct from your income taxes?

A)Cash donations
B)Clothing and household items
C)Used cars,art,stock,and other goods
D)Cost of dinner at a benefit

Question 31

A(n)________ trust is a trust for the benefit of the spouse and/or children that allows you to avoid paying estate taxes on life insurance proceeds owned within the trust.

A)revocable
B)bypass
C)charitable remainder
D)irrevocable

Question 32

What happens if you die without a will?

A)The executor tends to your account.
B)The court determines who gets what.
C)Your goods will be auctioned.
D)Your siblings will disperse your money between themselves.

Question 33

A(n)________ is a document that outlines your preferences or your directions for the administration and the withdrawal or withholding of life-sustaining medical treatment in the event of terminal illness or permanent unconsciousness.

A)advance directive
B)durable power of attorney for health care
C)living will
D)power of attorney

Question 34

To qualify for a deduction,which of the following is not true when making a donation?

A)Works of art must be valued at the garage sale price.
B)A receipt needs to be received.
C)The amount over the cost of a meal can be deducted when spending money on a dinner supporting a cause.
D)Donations to an individual,political campaign contributions,raffle tickets,and time cannot be deducted.

Question 35

What is it called when someone dies without having a valid will?

A)Testate
B)Living will
C)Intestate
D)Interstate

Question 36

A letter to your heirs and your executor outlining your wishes for your funeral arrangements,who to notify in the event of your death,and other wishes is called a

A)will.
B)testate.
C)letter of intent.
D)bypass trust.

Question 37

A(n)________ is a legal document that designates another person to act on your behalf.

A)advance directive
B)durable power of attorney for health care
C)living will
D)power of attorney

Question 38

A charitable contribution is tax deductible if ________.

A)the group is a non-profit
B)it is given to an individual
C)it is a contribution to a political campaign
D)you are donating your time

Question 39

In a Roth 401(k)plan,________.

A)the money you put in is taxed when withdrawn
B)the money you put in is not taxed when withdrawn
C)the money you put in is only taxed when withdrawn before age 59
D)the money you put in cannot be withdrawn until retirement

Question 40

A(n)________ becomes effective upon you becoming incompetent or unable to manage your affairs.

A)advance directive
B)durable power of attorney for health care
C)living will
D)power of attorney

Question 41

Those who are self-employed can invest in a simplified employee pension plan.

Question 42

The Internal Revenue Code provides two mechanisms for transferring property to individuals free of gift tax: the lifetime gift tax exemption and the annual exclusion amount.

Question 43

Regardless of your tax bracket,once in retirement,you do not have to pay taxes on earnings from a 401(k)plan.

Question 44

A bypass trust allows married people to avoid certain taxes after death.

Question 45

Estate and inheritance taxes are levied at the passing of your property at the time of your death.

Question 46

Charitable remainder trusts have tax advantages but provide no estate planning benefits.

Question 47

If you have 10 children and you and your spouse want to maximize the amount you can give to each child each year before you have to pay gift tax,what would the total gifts be each year?

A)$14,000
B)$28,000
C)$140,000
D)$280,000

Question 48

The Social Security Act was signed into law in 1935 by President Franklin D.Roosevelt and was meant to provide a safety net against poverty by providing a majority of your pre-retirement income.

Question 49

If you have 10 children and you and your spouse want to maximize the amount you can give to each child each year before you have to pay gift tax (use the 2016 rate),what is the maximum amount each child can receive each year?

A)$14,000
B)$28,000
C)$140,000
D)$280,000