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Erq80

Business Finance

Description

Mr. and Mrs. Ybarra, a retired couple in their late 70s, come in to meet with you. They are very friendly and living a comfortable retirement due, in large part, to the overall size of their estate (nearly $4 million dollars spread over multiple accounts) and their conservative asset allocation.

As you bring up the issue of estate planning, they thank you for your concern, but explain that it is already taken care of. They go on to explain that their attorney has prepared wills for both of them and all of their accounts are titled Jointly with Rights of Survivorship.

There are surprised, and a little confused, when you mention that their heirs might end up receiving only a fraction of those assets after the two of them pass away.

Include the following in your explanation to Mr. and Mrs. Ybarra:

  • The transfer-tax system
  • What is considered part of the estate
  • How much is excluded from taxation based on current legislation
  • Gross estate versus adjusted gross estate

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Explanation & Answer

Attached.

Running head: TAXATION

1

Taxation

Name:

Professors name:

Course:

Date:

TAXATION

2

Introduction

Mr and Mrs Ybarra needs to understand despite the fact that they have a well written will
to the heirs and inheritance of their property they might end up getting nothing. This is because of
the taxation cost associated with estate (Hummel, Pfaff & Bisig, 2017).

The transfer-tax system

The transfer tax system involves the process by which property title is transferred from one
person to another. On the other hand, the transfer tax system is more of a fee involved upon the
transfer of the property title (Rai, 2018). Therefore, mr and mrs Ybarra ought to b...


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