CFP Estate Flashcards
1
Q
Non community property
A
Income earned / assets owned prior to marriage
Received as gift or inheritance by one spouse
2
Q
Community property step up
A
Full step up in basis (LTCG property only) if at least 50% is included in deceased’s gross estate
3
Q
What assets do not get a step up in basis?
A
Profit-sharing plan (NEVER a step up in common or community)
CDs (not LTCG)
4
Q
JTWROS
A
does NOT go through probate
passes to joint owners directly bypassing the will
would require attorney to sever joint tenancy which would change it to TIC
5
Q
Non spouse joint owner
A
First to die gets 100% in gross estate unless other person can prove CONTRIBUTION
A gift of property is not deemed to be a contribution
6
Q
TBE
A
can ONLY be held by spouses
no probate
cannot be disclaimed
transfer requires MUTUAL consent
Why? Protected from claims of ONE spouse’s creditors
7
Q
TIC
A
Tenants in common
subject to probate
UNDIVIDED interest
no survivorship rights, just goes through probate/gross estate
8
Q
Probate assets
A
ICET
Individually owned
Community
Estate as bene
Tenants in common
NOT Probate
JTWROS
TBE
POD / TOD
Totten Trust
Transfer by contract (beneficiaries) for IRAS, Qual plans, life ins, annuities
Deeds of title
Trusts
9
Q
When is estate tax filing required?
A
Form 706
if gross estate plus taxable gifts > exemption amount
OR
if electing portability
10
Q
Gross Estate
A
All probate
+
JTWROS/TBE
Life insurance (including any transferred w/in 3 years)
Gen power of appointment
Retained interests
and
GIFT TAXES PAID WITHIN 3 years of DEATH
GSTT paid within 3 NOT added back
11
Q
Adjusted Gross Estate
A
After funeral expenses, admin expenses, debts, taxes, casualty losses
12
Q
Taxable estate
A
Gross > AGE
Minus marital
and charitable deductions
BOTH UNLIMITED for US citizen spouse
property must actually pass to spouse (Exception: QTIP)
13
Q
Which ownership types are disclaimable?
A
JTWROS
Sole ownership
Tenants in common
Exception:
Tenants by Entirety
Think “E” for exception
14
Q
USDA
Uniform Simultaneous Death Act
A
IF two people die within 120 hours = 5 days
15
Q
Totten trust
A
Like a POD/TOD
16
Q
Which assets get step up?
A
LTCG - stocks, mututal funds, Home, Life insurance death ben (amount over premium paid)
NOT ordinary income producing
Vehicles, IRAs, CDs, 401k, Var Annuity
17
Q
Testamentary trust
A
created by will after probate
18
Q
Estate / Gift
Exemption vs Exclusion
A
Annual Exclusion: $18K
Lifetime Exemption: $13.61M
Total: $13,628,000
19
Q
Estate Tax Base
A
Gross > AGE > Taxable Estate
PLUS Adjusted Taxable Gifts (amounts > annual exclusion)
= Tax Base
20
Q
Estate Tentative Tax
A
Gross > AGE > Taxable Estate > Tax Base
LESS estate tax deduction
* 40%
= Tentative Tax
21
Q
Net Estate Tax
A
Gross > AGE > Taxable Estate > Tax Base > Tentative Tax
Less Gift Taxes Paid
=
Net Estate Tax
22
Q
What assets might not be included in the gross estate at FMV?
A
Life estates
Remainder interests
Reversionary interests
Single (pure) life annuities
23
Q
When is life insurance included in estate?
A
Decedent is insured:
Proceeds paid to executor of estate
Decedent at death possessed an incident of ownership in the policy
Insured transferred a policy with incident of ownership within 3 years of death
IF SOLD for value (vs gifted), nothing is included (VIATICAL) except cash value rec’d
If SPOUSE or someone else is the insured:
Replacement cost of policy included in your estate
If gifted to child, nothing included
24
Q
What is an incident of ownership in life insurance?
A
Right to assign, terminate, borrow against, name bene’s, change bene’s
NOT paying premium
25
Estate tax implications of power of appointment
General power (outright ownership)
Subject to estate and gift tax
Limited power
NOT subject to estate or gift tax b/c holder cannot appoint the property to themselves
26
Estate tax - Retained interest property
Included in gross estate
Exception: 529 plans
27
Non typical forms of a gift
Forgiveness of debt
Below market loans
Assignment of benefits of an insurance policy
Transfer of property to an irrevocable trust (Transfer to a revocable trust controlled by donor is not a gift)
28
Appropriate donee for highly appreciated property
Charity or donee in low tax bracket
May want to keep until death to get step-up in basis (compare estate tax vs cap gains rate)
29
Donating Property LIKELY to appreciate
Good to gift to remove future growth from estate
30
Gifting income-producing property
Good to gift only if donee is in a lower tax bracket
31
Gifting Loss Property
Sell to take the loss and then gift the proceeds from the sale
32
Gifting out of state property
Good to avoid ancillary probate
33
Gifting property subject to depreciation
Keep until fully depreciated
34
Gifting fully depreciated property
Excellent gift using lease back technique
35
Gifting life insurance
Excellent to gift - valued at replacement value but "blossoms" to face value
36
Valuation of gift
Gain property
Value = FMV minus annual exclusion
Basis carries over from donor if FMV > adjusted basis
Loss property
"Dual basis" or "Double basis" rule
Sale price above original basis > Gain
Sale price between original basis and FMV of gift > 0 no gain or loss
Sale price below FMV value > Loss (ST/LT based on holding period)
37
Deductible gifts (for gift tax purposes)
aka Exempt gifts
aka Qualified transfer
Gifts to US citizen spouse
Gifts to qualified charities (may or may not be INCOME tax deductible)
Qualified payments in any amount made directly to Education institution for tuition only, or Medical Care Provider
Gifts to AMERICAN political parties
Taxable gift amount = 0
38
When is 709 required?
> $18K to any non spouse donee
Gift of future interest in any amount
Gift from INDIVIDUAL account for which electing gift splitting
If joint account, consent/filing not required - assumes 50% from each - unless over the limit
If 36K from single account, have to file and spouse signs
39
Gifts of a future interest
do NOT qualify for the gift tax exclusion - meaning they are a taxable gift
- 2503b is future interest except annual income
- remainder interest
- trust in which income will be accumulated for a period of years
exceptions (these do qualify):
529
UTMA/UGMA
2503c minor trust
crummey trusts - also used for minors - 30 day withdrawal rule makes it a present interest
40
Non citizen gift recipient exclusion
$185K annual
41
Taxable gift vs Gift tax
can still be a taxable gift, but only TAXABLE after exclusion
42
Not a completed gift
Revocable trust
Disclaimer
Disclaimer trust
43
Tainted trust for income tax purposes
Trust income is or may be used to pay premiums on life insurance (ILIT) for life of grantor or spouse
(via yearly gift or income on lump sum gift)
Reversionary interest that exceeds 5% of trust value at TIME OF CREATION
Power to control beneficial enjoyment of P&I held by grantor or spouse, retaining right to decide WHO will receive and/or WHEN they will receive
44
Tainted trust for ESTATE tax purposes
Reversionary interest > 5% at TIME OF DEATH
Beneficial enjoyment - right to income or right to enjoy trust property
>> Double taxation - income & estate
45
Simple vs Complex Trust
Complex taxed as separate entity
Irrevocable AND grantor has NOT retained any control
and
Income is accumulated , MAY be distributed
Accum income taxed to trust
Corpus MAY be distributed
Example: 2503c
Charitable gifts permitted
Simple - conduit for forwarding income to beneficiaries
Income MUST be distributed, taxed to beneficiaries
No distribution of corpus
Example: 2503b, QTIP, QDT, Dynasty
Charitable gifts not permitted
Corpus distributed at termination
46
DNI
Distributed/Distributable Net Income
Limits the amount that trust beneficiaries must report as gross income for income tax purposes
Provision added to a trust to prevent general power by limiting the amount that the bene can pull out.
DNI means they only have right to income.
When beneficiary dies, none of the corpus will be included in beneficiary's estate.
47
Distributed net income (DNI) is a concept that has been developed for which of the following purposes except?
A. Limiting the amount of distributions that may be taxable to the beneficiaries.
B. Advising beneficiaries of the amount of income the trust has earned that represents their interest.
C. Establishing the character of the amount taxable to the beneficiaries.
D. Limiting the deduction, a trust may receive for amounts distributed to beneficiaries.
B
DNI accounts for the income to the beneficiary as well as the corresponding deduction for the trust.
48
During the year a simple trust realized $8K capital gains from sale of bonds and $5k from dividends. how much would be distributed?
$5K
Trust req'd to payout income. The rest is addition to corpus and taxed to the trust.
49
Crummey trust
Irrevocable trust with demand rights. Temporary demand right for period after contribution is made to trust
Makes it a gift of a PRESENT interest
Typical usage for unfunded life insurance trust
ANNUAL right of w/drawal is LESSER of value of gift transferred OR annual exclusion $18K
HAPPENS WHEN MONEY IS GOING IN
50
Ascertainable standards
ie HEMS
Distributions for ascertainable standards are NOT subject to estate tax or gift tax
51
Five or five power
Greater of $5000 or 5% of corpus is included in my estate if i die and have NOT exercised my 5 or 5 right that year
Nothing to do with future vs present interest
This withdrawal is available only after Crummey right is settled
AFFECTS MONEY GOING OUT
52
Grandmother sets up $1m trust where I receive all income and 5 or 5 power.
What is included in my estate if i have NOT exercised my 5 or 5 right for that year and I die?
Greater of $5K or 5% included in my estate
53
Grandmother sets up $1m trust where I receive all income and 5 or 5 power.
What is included in my estate if i exercised my 5 or 5 right and spent the money and then died?
Nothing
54
Grandmother sets up $1m trust where I receive all income and 5 or 5 power.
What is included in my estate if i exercised my 5 or 5 right and and then died without spending the money?
Nothing from trust included but the unspent money is included
55
How much of a trust from grandmother is included in my estate if I do NOT have a 5 or 5 power?
Zero
56
Durable vs Non Durable vs Springing POA
Durable extends throughout Competent to Incompetent
Non Durable only good while Competent
Springing good for Incompetent
57
Special needs trust
For disabled individual
Preserves PUBLIC benefit eligibility
(Medicaid, SSI, Section 8 housing)
Funded by parent or other
58
OBRA
Omnibus Budget Reconciliation Act '93
"Payback Trust"
Funded by disabled person
Medicaid eligible but state paid back on death
59
3 year rules
(within 3 years of death)
Gift taxes paid go to gross estate
Life insurance on your life transferred goes to gross estate
60
Trust provisions
Crummey - when money goes IN
lesser of 18K or value of gift PER YEAR
Money going OUT:
Income only
Special power (HEMS) ascertainable standard
5 or 5 - only taxable to estate if > 5K or 5%
61
B Trust
First spouse to die controls it
Controlled from "B"elow ground
aka: Bypass
Credit Shelter
Family Trust
Non-Marital
Applicable Credit Amount
Usually an amount up to exemption amount $13.61
can have HEMS and 5 or 5 provisions
62
C Trust
POST MORTEM control over trust when 2nd spouse dies
QTIP trust
Cue-TIP "C"
Current Int
Assets pass by Marital Deduction
L-A-M-E
Lifetime income
Annual payments
Mandatory
Exclusively for spouse
Included in ESTATE OF 2nd spouse
63
A Trust
Second spouse to die controls it
"A" above ground
Marital
Spousal
General power of appointment = outright ownership
Assets pass by Marital Deduction
Included in ESTATE OF 2nd spouse
64
Reverse QTIP election
Preserves the GSTT exemption
Although a marital deduction is claimed for a QTIP trust, the estate can treat the trust, solely for GSTT purposes, as if it is still part of the decedent's taxable estate.
Simply put, GSTT exemption is not lost if reverse QTIP elected.
65
QDT / QDOT
Qualified Domestic Trust
Similar to QTIP but for non-citizen spouse
Qualifies for the unlimited marital deduction
66
Non-citizen spouse estate tax implications
No estate tax marital deduction
Exemption amount IS available if resident alien (green card)
Jointly held property is NOT considered 1/2 owned. Ownership based on consideration.
Gift "Super" annual gift tax exclusion of $185K
To qualify for marital deduction property must pass to QDT
67
US citizen married to Non-US citizen
Non-US citizen dies leaving all to US citizen
Estate tax implications?
No federal estate tax due
Cannot impose on foreign citizen
68
Betsy Ross US citizen married to Canadian living in the US
She has gross estate of $15.61m. She dies. No QDT in place. What will be the taxable estate?
$15.61M
no marital deduction
This is TAXABLE ESTATE
before the estate tax deduction
69
Sprinkling / spray provision
income only
vs P&I
70
Rule against perpetuity RAP
Dynasty trust = B trust
can cover lives in being + 21 yrs and 9 mos
then distributed
71
Trust Powers
General - outright ownership - included in estate at death
DNI - income only - not included in estate
5 or 5 - use it or lose it each year - general power but limited to 5/5 - unused
HEMS - ascertainable standard - not included in estate
72
UGMA vs UTMA
UGMA securities, EE's, life insurance, annuities. Most states, no real estate.
Distributed normally at 18
UTMA allows ANY property including real estate, partnership interests, patents, royalty interests, IP
Distributed normally at 21
Can be testamentary
Both can be included in custodian's estate
73
529's and K-12
$10k a year
74
529's and student loans
$10k / lifetime / student
75
529 benefits over UGMA/UTMA or 2503c
no $18000 annual gift limit
No age 21 rule
and Retained Interest
76
2503b vs 2503c
2503b:
future interest (no exclusion)
INCOME distributions only, can be subject to kiddie tax
the income is present interest qualifying for annual exclusion
2503c:
present interest qualifies for exclusion, remainder taxed at TRUST RATES (not kiddie tax)
normally distributed at 21
can be included in grantor/trustee's estate
costs to setup and maintain
any type of asset
77
Dynasty trust
B trust benefitting multiple generations
Can last for the lives in being plus 21 years and 9 months (rule against perpetuities) OR as long as local law allows
Income is taxable but the trust passes from one generation to the next tax-free
78
Mr and Mrs want to establish a dynasty trust. how much can they contribute and not incur any tax due at inception?
A: Mr up to his exemption amount
B: Mr and Mrs up to combined exemption amount
C: Mr and Mrs up to exemption amount plus 2 annual exclusions
B
no annual exclusion b/c gift of future interest
79
Charitable transfer
Income to charity first
CLAT / CLUT (no 5%)
not effective while living but rather established at death
income goes to charity, then remainder to children/bene's
Private Foundation (5%)
can grant to individual person/non charitable bene
80
Charitable transfer
Income to donor first
Trust:
CRAT (5%) - no add's, payments fixed "sum certain"
CRUT (5%) - add's allowed, payments variable min 5% of reappraised value. Think U - unequal payments.
Life term or not > 20 years
No Trust/Single Charity:
Pooled Income - add's allowed, payments variable, common fund
Charitable Gift Annuity - no add's, fixed income. Deduction is excess over annuity amount.
81
Which charitable transfers have 5% min rule?
CRAT
CRUT
Private Foundation
82
Donor advised fund
"poor person's private foundation"
charity sets up a sub account or FUND in the donor's name
donor makes recommendations of grants to be paid
no income stream
83
Wealth replacement trust
ILIT
to provide estate liquidity
or
to fill the gap of money put into CRT's so there is money for heirs
84
NIMCRUT
Net Income with Make-Up Unitrust
CRUT for working people who don't need/want the income from the CRUT
Make-Up - deferring the initial income payments until retirement and then making up the entire amount
Good way to defer income
85
Charitable stock bailout
Gift of stock of closely held corp
cannot agree on timeframe for redemption
86
Charitable bargain sale
sale for less than FMV
(sale amount / FMV ) * basis = adjusted basis
sale - adjusted basis = taxable gain
87
Intrafamily transfers - Property owner needs income
Installment sale
SCIN - self-canceling installment note
Private annuity
Grantor Retained Annuity Trust (GRAT/GRUT)
PIGS need income
Private.. Installment ...GRAT/GRUT... SCIN
88
Installment sale
sale of property at FMV in exchange for payment stream
spread out and defer capital gain
PV of remaining payments INCLUDED in estate
Gain is capital gain
Do NOT use if property is subject to recapture - if installment sale triggers recapture of depreciation it must all be recognized in year of sale
89
SCIN
Self cancelling installment note
Balance of any payments due at date of death are cancelled
NO value included in owners estate
Gain is capital gain
Assets can be depreciated
Interest can be deducted
Higher payment than installment and buyer will pay more
Cancelation of payments will trigger recognition of the entire remaining capital gain on decedents estate tax return
90
Private annuity
Not used anymore
Sale of property in exchange for periodic payments from private party/family member
NO value in owners estate
Property transferred for a promise
Proposed regulations would have ALL gain from life of annuity taxed in the year it was established
If reg changes, likely to stop using private annuities
91
GRAT / GRUT
Grantor Retained Annuity Trust / Uniform Trust
Irrevocable trust FOR APPRECIATING OR INCOME PRODUCING PROPERTY in exchange for annuity - think "GR" for GReatly Appreciating, like crypto
NOT GOOD IF HEALTH ISSUES
End of term, corpus distributed to remainder person
Value of the gift is discounted (due to the retained interest)
Owner must outlive term or the asset is brought back into estate - "string" attached
GRUT will have variable payout due to fixed % of revalued assets
OBJECTIVE is to remove the asset from the estate
92
GRIT
Grantor retained income trust
no tax advantage for family
good for common law arrangements
used to be for same sex couples
93
Which intra-family / business transfer techniques allow owner to maintain control?
Partnership/S corp - gifting shares
Family Limited Partnership
NOT
installment sale
SCIN
Private annuity
Gift Leaseback
GRAT/GRUT
94
Installment sale vs SCIN re: estate tax
Installment sale - use when no estate tax issue
SCIN - use if estate tax IS an issue
95
Intrafamily transfers - Property owner does not need income / wants to gift assets and/or income to family members
Gifting shares of Partnership / S Corp - take advantage of annual gift exclusion and use to shift income to recipients
Family Limited Partnership
Gift leaseback - for FULLY depreciated property
QPRT - personal residence
96
Gifting shares of Partnership or S Corp
Business entity must be capital sensitive, not available if service related business (rental income OK)
Ineffective if child < 24 due to kiddie tax
Maintains control
97
FLP
Family Limited Partnership
Why create it? Gifts can qualify for various valuation discounts.
example: $18K gift may be discounted by 50% allowing a tax free gift of $36K
No step up
General partner maintains control
98
Gift leaseback
FULLY depreciated assets
Business can take a deduction for the lease payment
Gift to a lower bracket family member
99
QPRT
Qualified Personal Residence Trust
irrevocable
retains interest for personal occupancy for period of years
then passes to beneficiaries of trust
can be primary residence + vacation home
gift of FUTURE interest - NO annual exclusion amount
at the END of the trusts initial term, value would pass estate tax free
Also has a "string" attached
if owner dies before initial term expires, FMV at date of death is included in donor's estate
WHEN?
Large residence valued at $1m or more
Reasonable life expectancy (at least 10 years)
Donor stays in residence
Large estate > $13.61m single, $27.22M married
100
Which family transfer techniques have a "string" attached?
GRAT/GRUT
QPRT
If owner dies before the term ends, full FMV comes back into estate
101
Who is a skip person for GSTT?
2 generations younger (or more) if same family
or
Unrelated person 37 1/2 years younger (18 y + 9 mos + 18 y + 9 mos)
if children die, grandkids move up a level and are no longer SKIPs
102
What are three types of skips for GSTT?
Direct skip (G1 > G3) No trust
Taxable Termination (Person terminates) Ex: Money in trust, G2 person dies so money goes to G3
Taxable Distribution (from Trust)
103
Who pays the GSTT in different type of skips?
Direct Skip: Donor
Taxable Termination: Trustee
Taxable Distribution: Recipient
Danko Says Don't
Talk Tennis w/Thomas
Thomas Doesn't Relent
104
GSTT exemption amount
flat tax of 40%
for each DONOR, $13.61m is exempt
$18K annual exclusion per DONEE for LIFETIME gen skipping DIRECT skip gifts only
NO $18K exclusion for Taxable Termination or Taxable Distribution
Spouse can consent to splitting
For DIRECT skips only:
Allocation of exemption is automatic but can elect to not apply some/all of it
For ALL other skips: allocation of exemption must be elected
105
GSTT and Gift Tax
If Person dies with $18,610,000 estate tax base and all assets went to grandkids (children's parents are living), how much GSTT and how much estate tax due?
Both apply
$2M estate tax ($5m x 40%)
GSTT =
$18.61 - ($13.61 + estate tax paid) = $3M x 40% = GST $1.2M
106
GSTT calculation
Gen skipping amount
Minus
(exemption/exclusion amount PLUS estate/gift tax PAID)
=
Taxable amount
x 40%
GST tax due
Gift exclusion only while LIVING
GST exclusion only for Direct Skip
107
Post mortem planning techniques
Alternate valuation date
Alternate value = FMV at six months after death
Both must occur before AVD can be elected:
Using it must cause reduction in total value of gross estate
Amount of fed tax liability must be reduced as a result
Generally must be applied to all assets
Not applicable to wasting assets that naturally lose value over time
CAN ONLY BE ELECTED IF ESTATE TAX DUE
108
If the AVD alternate valuation date is elected, can assets be valued at dates other than the 6 month alternative valuation date?
Yes: Wasting assets cannot be valued with AVD
109
Disclaimer conditions
Irrevocable refusal to accept interest
In Writing
Within 9 months of death
Cannot have accepted any interest in the benefits
As a result, interest will pass without disclaiming person's direction, to someone else
110
Disclaimer trust
Similar to bypass
If beneficiary disclaims assets, they can go into irrevocable trust that pays income or HEMS, no 5 or 5
Testamentary
111
Post Mortem Elections for Estate Liquidity
Section 303 stock redemption
Installment payment of estate taxes
112
Post Mortem Elections for Estate tax REDUCTION
Special use valuation (2032A)
Discounts the valuation of real estate up to $1,390,000
For Family farm or closely held business
50% of gross estate must be real/personal property
25% of gross estate must be real property
$750K indexed to $1,390,000 in 2024 reduction in gross estate
Must be qualified use: 5 out of 8 rule before death, 10 years after death
113
Section 303 stock redemption
Post mortem election for estate tax liquidity
Corp makes a distribution of a portion of stock that will not be taxed as a dividend
Business must be INCORPORATED & CLOSELY HELD
Value of stock must be > 35% of adjusted gross estate
Amount of stock redeemed as cap gain cannot exceed the sum of the estate taxes plus admin expenses
114
Installment method (6166)
Payment of estate taxes
Payable in 10 installments beginning 4 years after death
Property in a sole prop, partnership, or corp. Aggregation allowed if > 20% in each.
Value of businesses must be > 35% of AGE
First 4 years can pay interest only 2% for first tier, not deductible
115
Estate planning for non traditional relationships
Revocable Trust or possibly Tenants in Common are good answers
Guardianship should be established for any kids
Will - not a good answer
JTWROS can be dangerous b/c one partner can sever the joint tenancy, reachable by creditors, etc.
No marital deduction
GRIT may be beneficial
116
Mr X died while married to his 2nd wife. As part of estate settlement, she was given the right to live in HIS residence for remainder of HER life. Can property be treated as QTIP?
a. No there is no QTIP trust
b. Yes, as long as the executor elected to treat the property as a QTIP property
Answer: B
QTIP property need not be held in a trust. Only exception that he knows of.
117
Dad is setting up educational trusts for his minor children now. Which type should he consider if concerned they may not attend college?
2503c
2503b
Crummey
Irrevocable
529
Crummey
Why? Gift of present interest but does not have to terminate at 21 (like 2503c) where they would get the corpus at 21.
2503b generally not for minors.
Both Crummey and irrevocable - can continue indefinitely. Irrevocable is gift of future interest.
529 is not a trust.
118
Dad is setting up trusts for minor children. what type should he select?
2503c
2503b
Spendthrift
Irrevocable
UTMA
2503c
Present Interest until minor would take over
Unless irrevocable trust has crummey provisions it would be future interest (no exclusions)
119
IRD
income in respect of decedent
120
Net gift technique
Advanced gift strategies
Gift made on condition that donee pays the gift tax
Donor's full exclusion $13.61 must first be exhausted
Decedents estate will include amount of gift tax paid by donees on net gifts made w/in 3 years of death
121
Reverse gift
Advanced gift strategies
when one spouse possesses most of the wealth and other less affluent spouse has relatively short life expectancy
wealthier spouse makes a gift of low basis assets to the dying spouse
122
Value of life insurance policy with partial premiums
Take expected growth in value over one year, prorate based on # of months into year
Plus interpolated terminal reserve at end of prior year/cycle
Plus Prorated portion of premium not used/received
Example:
Toby owns policy on his father face value $500K. Toby dies 6/30. Policy reserve was $40K on 11/30 last year and will grow to $46K this Nov. He made annual premium payment of $5K on 11/30 last year. What is value of policy in gross estate if IRR is 5%?
$46K-$40K = $6K x 7/12 months = $3500
+ $40K
+ $5000 x 5/12 = $2083 unearned annual premium
123
