Certified Senior Advisor (CSA) Practice Test

In the context of estate planning and settlement, it's important to understand the implications of 401(k) and IRA accounts when they are designated to beneficiaries. Upon Carol's passing, her designated 401(k) and IRA accounts will indeed be included in her taxable estate. The taxable estate comprises all assets that are subject to estate taxes, and retirement accounts like a 401(k) and IRAs are typically included in this calculation because they may generate income and thus be subject to taxation upon withdrawal by the beneficiaries.

Though these accounts may not go through the probate process, which involves the legal validation of a will, they are nonetheless considered part of the total value of the estate for tax purposes. The beneficiaries will eventually handle these accounts based on the rules governing such retirement plans, but for estate tax calculations, they contribute to the overall taxable estate value at the time of settlement.

This distinction clarifies that while the accounts are not part of the probate estate, they are certainly part of the taxable estate when assessing overall value for estate tax obligations. Thus, the classification of Carol's 401(k) and IRA as part of her taxable estate is accurate.