Personal Finance Final
The maximum gift that can be given to another person without incurring gift taxes is
$14,000
A salary-reduction plan is also known as a
401(k) plan
An employer may choose to match the contribution made by employees in a
401(k) plan or a salary-reduction plan
Employees who were born in 1960 or later can receive full Social Security benefits beginning at age
67
What percentage of American workers are covered by Social Security?
97%
The best definition of estate planning in
A definite plan for managing property during one's lifetime and at one's death
A codicil is
A document that explains, adds or deletes provisions in an existing will
The letter of last instruction is
A non-legally binding document that provides information regarding your death such as funeral arrangements.
When conducting a financial analysis for retirement planning, you should review
All of these - housing, life insurance, other investments, assets.
Which of the following is not a major source of retirement income?
All of these are major sources of retirement income - annuity, employer pension plan, personal pension plan, and public pension plan.
If you have fully funded your 401(k) and profit sharing plans up to the allowable limits then you may want to put away more money for retirement is a(n)
Annuity
Estate planning is an essential part of
Both retirement planning and financial planning
When you retire, you will probably spend less money on
Clothing
What steps should be taken in retirement planning?
Conduct a financial analysis and estimate retirement living expenses.
Social Security
Covers 97% of al American workers
Gladys wants to set up a trust that is also known as bypass trust, family trust "residuary" trust, A/B trust, trust. She should set up a(n)
Credit-shelter trust
This trust is designed to allow married couples to take full advantage of the federal estate tax exemption
Credit-shelter trust
how is eligibility determined for receiving Social Security retirement benefits?
Credits
All of the following are examples of defined contribution plans except
Defined-benefit plan
Another name for a Coverdell account is a(n)
Education IRA
in 1974 ERISA was passed. What does ERISA stand for?
Employee Retirement Income Security Act
Vesting is the right to receive the
Employer's contributions to a pension plan even if the employee leaves the company before retiring.
When you die, this tax will be based on the fair market value of your investments, property and bank accounts less an exemption of $5.34 million in 2014
Estate tax
An estate consists of
Everything you own
Candice is updating her estate planning and wants to write a legal document that will allow all of her assets to go to her spouse except for a certain amount that will be set up in a trust. The trust (plus interest) can provide her spouse lifelong income hat will not be taxed. She is writing a(n)
Exemption trust will
Willian is updating his estate planning and wants to draft a legal document that leaves all of his assets to his wife except a certain amount which goes into a trust
Exemption trust will
Trusts and estates must pay quarterly estimated taxes based on taxable income for
Federal income tax purposes
A will that is usually prepared with the help of an attorney is known as a(n)
Formal will
A(n) us the creator of a trust
Grantor
When you retire, you will probably spend more money on
Health Insurance
A handwritten will is known as a(n)
Holographic will
Which of the following will probably be your most valuable asset at retirement?
House
An "average" older (65+) household spends most of its money on
Housing
An "average" older (65+) household spends more money on
Housing than on cash contributions, entertainment and clothing combined.
This allows for the trustor to receive benefits during his or her lifetime
Inter vivos trust
When conducting a financial analysis for retirement planning
Investments should be evaluated to determine whether their income can help cover living expenses.
A(n)_______ cannot be changed or ended
Irrevocable trust
Another name of an H.R. 10 plan or self-employed retirement plan is a
Keogh plan
This is also known as a inter vivos trust
Living trust
Multiple copie sof a _____________ should be distributed to those closest to you as well as your family doctor
Living will
An employer's contribution will vary according to the company's profits in a
Profit-sharing plan
Jill is 45 years old and things that her future tax rate will be lower than what she currently pays, so she wants to defer her taxes on her contributions of up to $5,50 in 2014. Which plan would allow her to meet her goals.
Regular IRA
Julian's annual contributions to his retirement are not tax-deductible, but his earnings accumulate tax-free. He is investing in a
Roth IRA
Lawrence is self-employed and wants to establish the simplest type of retirement plan. He should set up a
SEP Plan
When planning for retirement, inflation
Should be considered since income received earlier in retirement will buy more than the same amount received due to the rising prices of goods and services
Jacob is updating his estate planning and wants to draft a legal document that leaves everything to his spouse. He is writing a(n)
Simple will
Which of the following is not an important document associated with estate planning?
Spending plan or budget
Robert's wife Fiona does not work, and they file a joint tax return. Robert can contribute on behalf of Fiona into a
Spousal IRA
Darlene is updating her estate planning and wants to set up a legal document that leaves $5.43 million to her husband. She is writing a(n)
State amount will
A will prepared on a preprinted form from a stationery store is called a(n)
Staturtory will
When an employer's contribution is used to buy stock int he company for its employees, it has a
Stock bonus plan
Sean's estate planning should
Take the needs of his wife and children into account
This is the best option if you or your beneficiaries are inexperienced in financial matters and if your estate taxes will be high.
Testamentary trust
This trust is established by your will and becomes effective upon your death
Testamentary trust
When thinking about retirement, which of the following is correct?
The sooner you start saving, the better.
A legal arrangement that helps manage the assets of your estate for your benefit or that of your beneficiaries is called a
Trust
A(n) _________ administers a trust
Trustee
When estimating your budget or spending plan at retirement, you should consider all of the following except
Withdrawing all retirement savings within five years of retirement
If you have children and are writing your will, you need to do all of the following except
Write the will with the help of an attorney
Which retirement plan specifies the benefits you'll receive at retirement age based on your total earning and
defined-benefit plan
Intestate is
dying without a valid will
This tax is only imposed by state governments
inheritance tax
When an employer promises to set aside a certain amount of money for each employee each year, it has set as a
money-purchase plan
A(n) ___________ allows you to end the trust or change its terms during your lifetime
revocable trust
Jason is updating his estate planning and wants to set up a legal document that leaves half of the adjusted gross estate to his wife. He is writing a(n)
traditional martial share will.
Your will must be signed by
you in front of two witnesses
