Estate Flashcards
Who falls under the lineal tree for GST?
Anyone under the grandparents of the transferor
How much younger is a non-lineal skip person?
37.5 years or younger
How do annual exclusions to a trust differ for skip persons?
They must also meet these requirements:
-beneficiaries are given a Crummey power
-the trust assets can only be distributed to the beneficiary during their lifetime
-the trust does not terminate before their death
-the assets must be inclusive in their gross estate
Can a disclaimer be used to avoid GSTT?
No
What are examples of a simple trust?
2503b
QTIP
Simple = distribution of income
Who pays the taxes on an IDGT?
The grantor
Are distributions from a trust considered a present interest?
Yes
How much is considered the gift out of a contribution to a GRT?
The amount of the contribution less the present value of the income stream
What is abatement?
A reduction of a bequest, such as when the estate assets are smaller than the amount declared in the will
What is ademption?
When a right is extinguished, such as when something is willed but not received (say someone wills a car that they sold before death)
What are the rules for disclaiming?
Disclaiming party cannot have benefited
Must be made in writing within 9 months
Person disclaiming cannot direct disposition of property
If the principal dies, who can you take orders from?
The accounts will be frozen until the estate administrator brings the letters testamentary
Can a planner choose not to recognize the POA?
Yes, if the agent requests an action that is harmful to the principal, the planner can refuse to take action
(Contact compliance department)
Should limited or general powers of attorney be used in the case of a non-marital trust?
Limited should be used
What assets avoid probate under state contract law?
Life insurance
Annuities
IRA, SEP, SIMPLE, qualified plans
POD and TOD
Trusts
Survivorship features
What is a net gift and what is the consequence?
A gift where the donee pays the gift tax. The donor will have taxable income to the extent of gift tax paid that exceeds the donor’s basis
Is gift splitting allowed with community property?
No
Can a surviving spouse elect to split gifts in the decedent’s final tax year?
Yes
What does the tax equal for a taxable estate over $1m?
$345,800 + [ 40% x amount above $1m ]
Which type of will does not require witnesses?
Holographic
Besides JTWROS, which ownership has a survivorship feature?
Tenancy by the Entirety
What is the difference between heir, legatee, and devisee?
Heir: state law inheritance
Legatee: inherits by will
Devisee: inherits realty by will
How are assets valued for estate tax purposes?
Securities: average high and low trading price for day of death (trading day before AND after if death is on a weekend); Accrued interest and dividends post to the account
Life insurance: death proceeds
Annuity: lump sum amount if settlement option is chosen by beneficiary
What are the deductions for AGE?
Funeral expenses
Last medical expenses
Administrative expenses
Debts
Losses
What are the deductions from AGE?
Charitable
Marital
Do unitrusts or annuities allow for additional contributions?
Unitrusts
What happens to community property when a couple moves to a common law state?
It retains community property status
