Plain English Exercises 4-6

Exercise 4

1. Three interrelated reasons could motivate a person to make a significant give to a charity.
2. First, the person may simply desire to aid the charity.
3. Second, the person may wish to avoid the capital gains tax by donating an asset that has sharply increased in value since they acquired it.
4. Finally, an exceedingly wealthy person might donate to reduce the amount of estate taxes to be paid upon their death.
5. Tax lawyers and estate planners should show their clients the many ways that giving to charity can also reduce their taxes.

Exercise 5

One of the primary obligations an agent owes their principal is to act with the normal degree of care, competence, and diligence exercised by similar professionals in similar situations. If the agent has special skills and/or knowledge, that must be taken into account when determining whether the agent has acted with due diligence. Also, the agent can only act within the authority granted to them by their principal. An agent must comply with all lawful instructions from the principal (or persons designated by the the principal) about their behavior on the principal's behalf.

Exercise 6

1. An insurance claims agent should not lightly reject a policy holder's facially valid claim.
2. Rather, the claims agent should carefully consider the possible consequences.
3. Every contract contains an implied term that the parties have a duty of good faith and fair dealing, and insurance contracts are no exception.
4. When a claims agent bluntly refuses to provide a reasoned explanation for failing to pay on a facially valid claim, it leads us to question that agent's good faith.
5. The insurance company must provide a coherent response to a facially valid claim to fulfill one of its good faith requirements.
6. The claim's agent continued use of the "stonewall" tactic for 10 months leads us to infer that the agent intended to stall until the policy holder capitulated or hired a lawyer.