SIE Unit 22

An ESA must be used before the age

30 A 529 plan has no limit both plans can be used for pre college education costs

A client and his spouse own shares in the KAPCO Fund as tenants in common. He has a 60% ownership interest in the account and the spouse has the balance. If the client dies, what happens to the shares in the account?

40% of the shares would belong to his spouse and the remaining balance would be distributed to his estate.

Alan and Barbara Collins have three minor children; Dan, Ellen, and Frank. Which of the following UTMA accounts could be opened?

Barbara Collins as custodian for Ellen Collins In an UTMA account, one adult is custodian for one minor. There is no such thing as joint custodians or joint beneficiaries.

Your customer, Jim, wants to deposit money into a 529 College Savings plan for his great-niece Penelope. He states four reasons why he likes the 529 plan. Unfortunately, you need to tell him he is incorrect on one point. Which of his following points is not considered a feature of a 529 College Savings Plan?

She has to use the money by the time she turns 30, so she will not be able to put it off too long. 529 plans grow tax deferred and the funds may be withdrawn tax-free if used for qualified education expenses. These plans may be used to fund secondary education (pre-college). There is no age limit to when the funds must be used.

Which of these business structures would pass through the results of the business to the owners and protect the owners from the liabilities of the company?

The LLC is the only one of these that both passes the income and losses through while providing liability protection. C Corps protect but do not pass through losses. General partnerships and sole proprietorships passes results through, but offer no protection.

Many investors like to put a transfer on death (TOD) designation on their brokerage accounts. Which of these are benefits of doing so?

The TOD designation avoids probate. There is flexibility to change beneficiaries as conditions dictate.

One difference between an UTMA account and an UGMA account is

an UTMA account has a wider set of allowed investments. UTMA accounts allow real estate holdings, an UGMA account does not. Neither accounts are tax deferred and both accounts are irrevocable. The UGMA transfers at the age of majority, the UTMA may transfer as late as age

Sam Malloy owns a small business and has built a substantial estate both with his business success and his early career as a pro athlete. He wants to set up his estate in a way that he will control the assets until he passes away or becomes incapacitated. Once that time comes, he wants control to transfer easily and he wants to avoid probate. Sam should

establish a revocable living trust. A revocable living trust will accomplish his goals for his estate. An irrevocable trust takes away his control of his assets. The business cannot be placed in a transfer on death account. A will must go through probate.

Sam Malloy owns a small business and has built a substantial estate both with his business success and his early career as a pro athlete. He would like to begin to move assets out of his estate in a way that will allow him to benefit from the assets, but also allows for an easy transfer to his heirs when he dies. He needs to lower the size of his estate before he passes and hates the idea of a public hearing that is part of probate. Sam should

establish an irrevocable living trust.

Marsha, Jane, Cynthia, Craig, Jim, and Robert are owners of an account JTWROS. If Craig, Jim, and Robert pass away then their interest in the account

remains in the account and is now the property of the surviving tenants.