Estate

Question 1

Installment Sale

Answer 1

1. Owner needs income
2. Sale of property at FMV in exchange for payments
3. PV of remaining payments is included in owner’s estate.
4. Gain is capital gain. Do not use if property is subject to recapture

Question 2

Self-canceling Installment code (SCIN)

Answer 2

Owner needs income

1. No value is included in the owner’s estate
2. Gain is capital gain
3. Assets can be depreciated
4. Interest can be deducted
5. Higher payout than installment sale

Question 3

Grantor Retained Annuity Trust (GRAT/GRUT)

Answer 3

Owner needs income
(Irrevocable trusts that allow the grantor to make gifts of property while retaining an income interest)
1. At the end of a term, asset can be distributed to a remainder person
2. The value of the gift is discounted (time, interste rat, etc.)
3. Owner must outlive term, or the asset is brought back into the estate

Question 4

Grantor Retained Interest Trust (GRIT)

Answer 4

A client transfers property to an irrevocable trust, retaining an “unqualified” right to income for a period of years

Question 5

Partnership/S Corporation

Answer 5

Owner does not need income.
(Gifting Shares)
1. Family member receives conduit income. Do not use if a child is under age 24
2. Business entity must be capital sensitive. Do not use if business is service-related.

Question 6

Family Limited Partnership (FLP)

Answer 6

Owner does not need income
(Gift intersts to limited partners to reduce the size of an estate)
1. Qualifies for various “valuation discounts” allowing for a greater reduction of the size of an estate.
2. General partner maintains control
3. Business is not service-related

Question 7

Gift Leaseback

Answer 7

Owner does not need income
(Gift of fully depreciated property)
1. Lease payments are a business deduction, income to family member.
2. Do not use if child is under age of 24.

Question 8

Qualified Personal Residence Trust (QPRT)

Answer 8

Owner does not need income
(A QPRT is an irrevocable transfer of a personal residence)
1. At the end of a term, the residence is eliminated from the estate
2. The value of the gift is discounted.
3. Owner must outlive term, or asset is brought back into estate.

Question 9

Assets subject to probate estate

Answer 9

• Singly owned assets
• Property held by tenancy in common
• community property
• Assets where the beneficiary is designated as the “estate of the insured”

Question 10

What is included in the gross estate?

Answer 10

Probate Assets: 
Singly Owned Assets
Tenancy in Common 
Estate as Beneficiary 
Community Property 

Non-probate assets: 
JTWROS/ Entirety 
Life Insurance 
General Powers
Gift taxes paid - 3 years 

(JTWROS causes the asset to split in half )

Question 11

What causes Life insurance to be included in the decedent’s estate?

Answer 11

• proceeds were paid to the executor of the decedent’s estate
• Descendent at death possessed an incident of ownership in the policy, or
• Descendent gifted his/her policy within Three Years of death.

Question 12

Adjusted Gross Estate

Answer 12

Gross estate less funeral expenses, admin expenses, debts, taxes, income taxes, state death taxes, and casualty losses.

Question 13

Taxable Estate

Answer 13

The taxable estate is the adjusted gross estate less the marital and charitable deduction.