Question

William died in 2015 with the following assets and liabilities: 200,000 in securities left to his wife,650,000 home left to his wife (the home cost 150,000),250,000 life insurance policy with his daughter as beneficiary, 75,000 in debts and estate expenses. What is William's taxable estate?

1) 750,000
2) 625,000
3) 175,000
4) 0; it is below the5.43 million exemption equivalent

Answer 1

William's taxable estate is below the $5.43 million exemption equivalent.

Step-by-step explanation:

The taxable estate is calculated by adding up the assets left behind by William and subtracting any liabilities. In this case, William left behind the following assets:

• Securities worth $200,000
• Home worth $650,000 (the cost of the home was $150,000)
• Life insurance policy worth $250,000 with his daughter as beneficiary

He also had $75,000 in debts and estate expenses. To calculate the taxable estate, we add up the value of the assets ($200,000 + $650,000 + $250,000) and subtract the debts and expenses ($75,000). The taxable estate is therefore $1,025,000. However, the estate tax exemption for 2015 was $5.43 million, so William's taxable estate falls below this exemption amount. Therefore, the correct answer is 4) 0; it is below the 5.43 million exemption equivalent.