Assignment task: Many years passed after Sarah took your advice. At 65, she is getting ready to retire. She has $1m in a 401(k) plan, a house worth $300k, and a cash savings account worth another $500k. She has decided that she has gone far too long without a will. She again asks your advice as to what she should bequeath to her husband and two children. One child is in the Peace Corps and makes very little money, whereas the other child is a wealthy attorney. She does not know their marginal tax rates, but she has heard the attorney say she's paying too much in taxes.
Q1. Discuss the taxability at death and bequeath of the different types of assets held by Sarah. Are there non-tax benefits to any of the assets that need to be considered when making a will? This does not need to be a memo.
Q2. Come up with a plan that helps "equalize" the after-tax receipts for her two children and husband (Hint: the lawyer probably shouldn't be given the 401(k)). This does not need to be a memo.