Estate

Question 1

Who falls under the lineal tree for GST?

Answer 1

Anyone under the grandparents of the transferor

Question 2

How much younger is a non-lineal skip person?

Answer 2

37.5 years or younger

Question 3

How do annual exclusions to a trust differ for skip persons?

Answer 3

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

Question 4

Can a disclaimer be used to avoid GSTT?

Answer 4

No

Question 5

What are examples of a simple trust?

Answer 5

2503b
QTIP

Simple = distribution of income

Question 6

Who pays the taxes on an IDGT?

Answer 6

The grantor

Question 7

Are distributions from a trust considered a present interest?

Answer 7

Yes

Question 8

How much is considered the gift out of a contribution to a GRT?

Answer 8

The amount of the contribution less the present value of the income stream

Question 9

What is abatement?

Answer 9

A reduction of a bequest, such as when the estate assets are smaller than the amount declared in the will

Question 10

What is ademption?

Answer 10

When a right is extinguished, such as when something is willed but not received (say someone wills a car that they sold before death)

Question 11

What are the rules for disclaiming?

Answer 11

Disclaiming party cannot have benefited
Must be made in writing within 9 months
Person disclaiming cannot direct disposition of property

Question 12

If the principal dies, who can you take orders from?

Answer 12

The accounts will be frozen until the estate administrator brings the letters testamentary

Question 13

Can a planner choose not to recognize the POA?

Answer 13

Yes, if the agent requests an action that is harmful to the principal, the planner can refuse to take action

(Contact compliance department)

Question 14

Should limited or general powers of attorney be used in the case of a non-marital trust?

Answer 14

Limited should be used

Question 15

What assets avoid probate under state contract law?

Answer 15

Life insurance
Annuities
IRA, SEP, SIMPLE, qualified plans
POD and TOD
Trusts
Survivorship features

Question 16

What is a net gift and what is the consequence?

Answer 16

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

Question 17

Is gift splitting allowed with community property?

Answer 17

No

Question 18

Can a surviving spouse elect to split gifts in the decedent’s final tax year?

Answer 18

Yes

Question 19

What does the tax equal for a taxable estate over $1m?

Answer 19

$345,800 + [ 40% x amount above $1m ]

Question 20

Which type of will does not require witnesses?

Answer 20

Holographic

Question 21

Besides JTWROS, which ownership has a survivorship feature?

Answer 21

Tenancy by the Entirety

Question 22

What is the difference between heir, legatee, and devisee?

Answer 22

Heir: state law inheritance
Legatee: inherits by will
Devisee: inherits realty by will

Question 23

How are assets valued for estate tax purposes?

Answer 23

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

Question 24

What are the deductions for AGE?

Answer 24

Funeral expenses
Last medical expenses
Administrative expenses
Debts
Losses

Question 25

What are the deductions from AGE?

Answer 25

Charitable
Marital

Question 26

Do unitrusts or annuities allow for additional contributions?

Answer 26

Unitrusts

Question 27

What happens to community property when a couple moves to a common law state?

Answer 27

It retains community property status