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CFP July 2023 > Estate > Flashcards

Estate Flashcards

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1
Q

Probate Calculation Shortcut

A
  • add all assets subtract out non-community property, then divide by 2. Once solved, add back non-community property items
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2
Q

Best way to leave assets to each other outside of marriage

A
  • revocable trust or tenants in common
  • a will or joint tenants with right of survivorship are INEFFECTIVE
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3
Q

Appropriate Gift Property: Highly to Appreciate

A
  • donate to charity
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4
Q

Appropriate Gift Property: Likely to Appreciate

A
  • gift to remove future value
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5
Q

Appropriate Gift Property: Income Producing

A
  • gift to someone in a lower tax bracket
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6
Q

Appropriate Gift Property: Loss Property

A
  • sale to take loss and gift proceeds
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7
Q

Appropriate Gift Property: Property Subject to Depreciation

A
  • keep until fully depreciated
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8
Q

Appropriate Gift Property: Out-of-State Property

A
  • gift to avoid ancillary probate
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9
Q

Net Gift Calculation

A
  • net gift = [gift tax / 1.4]
  • cannot use without using $12,920,000 lifetime exemption first
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10
Q

Generation Skipping Transfer Tax Calculation

A
  • generation skipping transfer tax due = total estate - [$12,920,000 + estate tax due] x 40%
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11
Q

Who pays Generation Skipping Transfer Tax

A
  • direct = transferor
  • termination = trustee
  • distribution = transferee
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12
Q

Estate Tax Due with Income in Respect to the Deceased

A
  • estate tax due = [federal estate tax WITH income in respect to the deceased] - [federal estate tax WITHOUT income in respect to the deceased]
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13
Q

A Trust

A
  • marital trust
  • power of appointment trust
  • spousal trust
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14
Q

B Trust

A
  • non-marital trust
  • credit shelter trust
  • unified credit trust
  • family trust
  • bypass trust
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15
Q

C Trust

A
  • qualified terminal interest property (QTIP) trust
  • current interest trust
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16
Q

Generation Skipping Tax Calculation

A
  • [estate - (exemption - estate tax due) = GSTT]
17
Q

Assets Subject to Probate

A
  • singly owned assets (individual ownership)
  • property held tenants in common
  • assets where beneficiary is the “estate of the insured”
  • 50% of community property
18
Q

Defective or Tainted Trust for Estate Tax Purposes

A
  • reversionary interest that exceeds 5% measured at time of death
  • right to income or enjoyment of the trust property
  • it is not good to taint a trust for estate tax purposes
19
Q

Defective or Tainted Trust for Income Tax Purposes

A
  • a reversionary interest that exceeds 5% of the trust value at the time of creation is retained by grantor or grantor spouse
  • power to control the beneficial enjoyment is held by grantor or grantors spouse
  • good to lower tax bracket
20
Q

Simple Trust

A
  • 2503(b), QTIP, QDT, dynasty trusts
  • income is distributed
  • income is taxed to the beneficiaries
  • corpus is distributed at termination
  • no charitable gifts
  • only dividends are distributed
21
Q

Complex Trusts

A
  • 2503(c)
  • income must or may accumulate
  • accumulated income is taxed to trust
  • income distributed is taxed to beneficiaries.
  • corpus distributed per trust terms
  • charitable gifts are permitted
22
Q

Can have HEMS and 5 or 5 provisions

A
  • life insurance trust
  • b trust
  • c trust
23
Q

Subject to Estate Tax at Second Spouse’s Death

A
  • a trust
  • c trust
24
Q

Assets pass using $12,920,000 Exemption

A
  • b trust
25
Q

Assets pass by Marital Deductions

A
  • a trust
  • c trust
26
Q

Gifting using Crummy Provisions

A
  • life insurance trust
  • death benefits passes tax free
27
Q

Reverse QTIP

A
  • going to grandkids
  • keeps GSTT exemption from being lost
28
Q

Minimum 5% Distribution Rule

A
  • CRAT
  • CRUT
  • private foundations
29
Q

No 5% Distribution Rule

A
  • pooled income fund
  • charitable gift annuities
  • CLAT/CLUT
30
Q

Additions Allowed (Charitable Transfers)

A
  • CRUTs
  • pooled income
31
Q

Any Charity Allowed (Charitable Transfers)

A
  • CRAT
  • CRUT
32
Q

Specific Charity Allowed (Charitable Transfers)

A
  • pooled income
  • charitable gift annuities
33
Q

Fixed Payments (Charitable Transfers)

A
  • CRAT
  • charitable gift annuity
34
Q

Variable Payments (Charitable Transfers)

A
  • CRUT
  • pooled income
35
Q

QPRT Keys

A
  • large residence
  • 10+ years of life expectancy
  • donor continues to live in house
  • larger than exemption estates
36
Q

Gift Leaseback Keys

A
  • conduit income
  • depreciation
  • 23+ years
37
Q

Liability of GST tax (Who Pays)

A
  • direct skip = transferor/donor
  • taxable termination = trustee
  • taxable distribution = transferee
38
Q

Installment Payment of Estate (6166) Safe Answer

A
  • closely held business
39
Q

Increasing Basis on Appreciated Gift

A
  • must be appreciated properly
  • gift tax must have been paid by donor

CFP July 2023 (8 decks)

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