Basic Need-to-Know Facts Flashcards
Federal Estate Tax Exemption in 2025
13.99 Million
Federal Gift Tax Exclusion Amount
$19,000
Maximum Federal Benefit Rate for SSI in 2025
$967
Income Cap
300% of Max. Fed. Benefit Rate ($2,901)
ADEA Age
40
Citation for Self Settled SNTs
42 USC 1396p(d)(4)(a)
Full Retirement Age
67 years old
Quarter of Coverage (SS credit)
$1,810 (2025)
Substantial Gainful Activity
$1,610/month
Dependent Adult Child (DAC) share of retired workers PIA
50% at Retirement/75% at workers Death
Age when Remarriage no longer affects survivor benefits
60
Estate Tax Due
9 months after DOD or 5 year extension for DSUEA purposes only
Alternate Estate Tax Valuation Date
6 months following DOD (It’s a trap!)
Earliest Penalty Free WIthdrawl from QRAs
59.5 years (with some exceptions)
RMD start date
April 1 of the year after the year in which you turn 73
Tax Return Form Numbers: Individual, Trust, Gift, Estate
1040, 1041, 709, 706
Qualified Disability Trust Exemption
$5,050
Federal Income Tax Brackets
10%. 12%, 22%, 24%, 32%, 35%, 37%
ADLs
- Bathing/showering,
- Dressing,
- Eating/feeding,
- “functional mobility” (usually listed as “transferring”),
- Personal hygiene and grooming,
- Toileting
IDLs
handling medication,
making change/handling money,
shopping,
use of telephone or communication device,
transportation,
housework
ISM Calculation
(1/3 of MFBR + $20 (or, at $967 MFBR, $342.33) – leaving a maximum SSI benefit of $967 – $342.33 = $624.67)
Relation of Federal Income tax brackets to Capital Gains Tax
For lower and middle-income taxpayers, long-term capital gains might be taxed at a lower rate than their ordinary income. For instance, someone in the 22% income tax bracket would pay only 15% on long-term capital gains.
For high earners, the top long-term capital gains rate (20%) is still lower than the top ordinary income tax rate (37%), providing a tax advantage for long-term investments.
Short Term Capital Gains - defined and tax rate
taxed at the same rates as ordinary income if the asset was held for one year or less.
Long Term Captial Gains - defined and tax rate
(assets held for more than one year) are taxed at lower rates, which depend on the taxpayer’s taxable income:
0% for individuals in the lowest income brackets.
15% for most middle-income taxpayers.
20% for individuals in the highest income brackets.
What is a Qualified Disability Trust and what are the requirements?
A QDT is designed to provide financial support for a person with a disability without affecting their eligibility for government benefits like Supplemental Security Income (SSI) or Medicaid.
Eligibility:
The trust must be established for the sole benefit of a beneficiary who is considered disabled under the Social Security Administration’s definition of disability.
Requirements:
Disability Certification: The beneficiary must provide certification of disability from a physician. This certification must meet IRS criteria.
Trust Document: The trust must be irrevocable, meaning once established, the terms cannot be changed, and it must be dedicated to the beneficiary’s welfare.
How is a QDT taxed and what is the exemption?
a QDT can claim an exemption amount similar to that of an individual taxpayer, which is adjusted annually for inflation (e.g., $5,050 for 2025). This exemption reduces the taxable income of the trust.
Tax Rates: The trust’s income is taxed at the rates applicable to individuals rather than the usually higher trust tax rates, which can be beneficial for lower income levels.
Requirements of QDOT
- At least one trustee must be a US citizen or domestic corporation,
and this trustee must consent before any distribution of principal
can be made - Executor of decedent’s estate must make a QDOT election on
estate tax return by its due date - Every distribution of principal from the trust is hit with the estate
tax that would have been imposed on the decedent’s estate had not
trust existed - Surviving non-US citizen spouse must be entitled to all income
from the trust at least annually
What is portability?
Is such an election required?
Standard Deadline?
Extended Deadline and restriction on use?
Benefit?
What is Portability? Transfer of unused estate tax exemption from deceased to surviving spouse
Election Required? Yes — via IRS Form 706
Standard Deadline 9 months after death (15 months with extension)
Extended Deadline Up to 5 years (Rev. Proc. 2022-32) if no estate tax return is otherwise required
Benefit Surviving spouse can apply DSUE to future gifts or at death
Schiavo Case
use substituted judmgent standard when determining end of life wishes for a person.
Tulsa Collections vs. Pope
Must give known creditors notice of probate
Decamebre
Distributions for trust income are countable toward housing assistance calculations, but not distributions from Princiapl
Fickett Case
Attorney can be held liable for malpractice if fiduciary her represents damages principal
Glucksberg Case
Physician Assisted Suicide is not a protected right under the Due Process Clause of the 14th amendment
Olmstead case:
Least restricted environment for disabled individuals
NAELA Aspirational Standards
i. Client Identification
Identify which party is the client at the earliest opportunity and
communicate to all involved
a. The person to whom the duties of loyalty and
confidentiality run
b. Arrange for private conversation with client, especially if
he has diminished capacity, unless attorney determines that
private meeting is not in client’s best interest, in which case
wishes must still be identified
c. Determine whether the client has sufficient capacity to
enter into relationship, which acting in accordance with
MR 1.14
d. Communicate that attorney only represents the client, even
if family comes to meeting, especially if asset transfers are
an issue
e. Assure that documents are drafted for the benefit of the
actual client himself
2. Use an engagement letter or other writing which meets the
requirements of ethics code to document what has been told.
Especially important if there are “joint clients”
So Are Bypass Trusts Still Relevant?
🛡 Asset Protection Assets in a bypass trust are protected from creditors of the surviving spouse, including lawsuits and divorce.
💰 Appreciation Shielding Assets in a bypass trust grow outside the surviving spouse’s estate.
👨👩👧 Blended Families The deceased spouse can ensure assets in the bypass trust eventually go to their children, not a new spouse or stepfamily.
🧾 State Estate Tax Planning Many states have their own estate tax, and most do not allow portability.
🔁 GST Planning A bypass trust can be structured to use the deceased spouse’s generation-skipping transfer (GST) exemption. GST exemption is not portable.
📉 Future Exemption Reductions
The federal exemption is scheduled to be cut roughly in half in 2026 unless Congress acts. Using a bypass trust now could “lock in” today’s higher exemption amount.
When Might You Prefer a QTIP Trust?
The estate is under the federal exemption limit and tax deferral is more important than exemption preservation.
You want your spouse to benefit, but maintain full control over where the assets go afterward.
You want to take advantage of a second basis step-up for capital gains planning.
You are in a state with no estate tax (or a high exemption) and want simplicity.
