Quiz+ | Quiz 44: Planning for the Future: Estates and Insurance

Q 1

If your grandparents were to die leaving a large estate, and all of their children were also dead, would you have a larger inheritance under a per stirpes or a per capita distribution?

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Essay

Even though Ann's father originally paid for the violin, he gave it to Ann as a gift; she even went to physically assume ownership of the violin at the original owner's location. As stated in the problem, Ann had absolute ownership of the violin for twenty years. Bailment is the rightful possession of goods by someone who is not the owner. The one who presents the items is the bailor and the one in possession is the bailee. In the situation outlined in the book, Ann Rylands is the bailor and her mother is the bailee, since Ann entrusted her prized violin to her mother for safekeeping and her mother accepted. As the bailee, her mother is obligated to return the violin to the bailor, Ann, when she requests. Ann is still the owner of the violin.

Q 2

YOU BE THE JUDGE WRITING PROBLEM Linda and Eddie had two children before they were divorced. Under the terms of their divorce, Eddie became the owner of their house. When he died suddenly, their children inherited the property. Linda moved into the house with the children and began paying the mortgage that was in Eddie's name. She also took out fire insurance. When the house burned down, the insurance company refused to pay the policy because she did not have an insurable interest. Do you agree? Argument for the Insurance Company: Linda did not own the house; therefore, she had no insurable interest. Argument for Linda: She was harmed when the house burned down because she and her children had no place to live. She was paying the mortgage, so she also had a financial interest.

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Essay

Even though Ann's father originally paid for the violin, he gave it to Ann as a gift; she even went to physically assume ownership of the violin at the original owner's location. As stated in the problem, Ann had absolute ownership of the violin for twenty years. Bailment is the rightful possession of goods by someone who is not the owner. The one who presents the items is the bailor and the one in possession is the bailee. In the situation outlined in the book, Ann Rylands is the bailor and her mother is the bailee, since Ann entrusted her prized violin to her mother for safekeeping and her mother accepted. As the bailee, her mother is obligated to return the violin to the bailor, Ann, when she requests. Ann is still the owner of the violin.

Q 3

ETHICS Donna and Carl Nichols each bought term life insurance from Prudential Insurance Company of America. These policies contained a provision stating that if the insured became disabled, the premiums did not have to be paid and the policy would still stay in effect. This term is called a waiver of premium. Carl became totally disabled, and his premiums were waived. Some years later, two Prudential sales managers convinced the Nicholses to convert their term life insurance policies into whole life policies. They promised that, once Carl made the conversion, he would only have to pay premiums on the new policy for a six-month waiting period. They even wrote "WP to be included in this policy" on the application form. "WP" stood for waiver of premium benefit. Only after the new policy was issued did the Nicholses learn that Prudential would not waive the premium. The Nicholses had exchanged a policy on which they owed nothing further for a policy on which they now had to pay premiums that they could not afford. Do the Nicholses have a claim against Prudential? Regardless of the legal outcome, did Prudential have an ethical obligation to the Nicholses?

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Essay

DN and CN bought life insurance from the PR insurance company. The provision within the policy stated that, premium need not be paid under insured party being disabled by any means. Later, when CN became disabled, the insurance company did not claim for the rest of the premiums as per provision. Some years later, the company asked CN to convert his term life insurance to whole life, and asked him to pay only for the new policy for a six-month waiting period. Waiver of premium provision was also included under this policy. This led CN to pay premiums at the time he could not afford, as the provision included the clause that CN has to pay premium for the waiting period of six months. Yes, CN can claim against PR insurance company. The policies should be under the control of the branch managers. Sales managers have no right to convert term insurance into whole life policies. Waiver of premiums should be included and excluded only under the provision of branch manager. Here, no agent can make a change in contract. So, the PR insurance company does not hold any ethical obligation to their customers, as it is the branch manager's responsibility to monitor the actions of their sales managers.

Q 4

Should you have a will? Do you have one?

Essay

Q 5

ETHICS Is an asset protection trust right? Should wealthy people be able to avoid paying legitimate creditors? What about perpetual trusts that avoid estate taxes forever? Legislators pass such laws to attract trust business from out of state. Trusts generate billions of dollars in fees each year. If you were a state legislator, how would you vote when this legislation came up for approval? If you had substantial assets, would you put them in such a trust? What Life Principles apply here?

Essay

Q 6

Billionaire Warren Buffett said that children should inherit enough money so that they can do anything, but not so much that they can do nothing. Is it good for people to inherit money? How much? At what age? How much would you like to leave your children?

Essay

Quiz 44: Planning for the Future: Estates and Insurance

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