Estate Flashcards
Two trusts that could include HEMS provision?
QTIP(c) and Disclaimer
Bypass trust quality for Marital Deduction?
No, uses exemption
Does terminal interest in house left to spouse qualify for marital deduction?
Yes
JTWROS subject to probate?
No, but is for Estate
Amount of owned life insurance policy included in probate /Estate? (On another’s life)
Interpolated terminal reserve
Debt, funeral and administrative expenses, and charitable deduction subtracted for gross estate?
No, subtracted for Adjusted Gross Estate
Gifts of future interest ( irrevocable trust) allowed annual exclusions?
No, unless there are Crummey provisions or is 2503(c) trust
Is GSST due at time of gift?
No, can be due later to due indirect skips
Step up basis for stock at time of death when buy/sell used?
Yes
When is life insurance trust needed?
When there is possible estate tax exposure
Non-Community Property (4)
Income earned prior to marriage
Property received as gift by one spouse
Property inherited by one spouse
Interest earned on separate assets by one spoise
JTWROS facts (5)
Can be held by husband/wife, parent/child, siblings, business partners
Control, ownership, and enjoyment shared equally
Upon death, property immediately passes to surviving joint tenants equally
Property Not controlled by terms of will
Not subject to probate
Tenancy by the Entirety facts (3)
Ownership by husband and wife only
Transfer of property only with mutual consent
Property protected from creditors of one spouse but not both
Tenancy in Common facts (4)
Two or more owners with undivided interest
Income distributed according to each owner’s %
Owners can transfer their share
Ownership stake subject to probate
Assets Not subject to Probate (6)
Property held by deeds of title (IRA)
JTWROS
Govt Bonds- co-ownership
Revocable Living Trusts
Payable on Death accounts
Totten Trust
Assets Subject to Probate (4)
Single owner assets
Tenancy in Common
Estate is beneficiary
Community Property
Assets in Gross Estate (8)
Single owned assets
Tenancy in common
Estate is beneficiary
Community Property
JTWROS/ Tenants in Entirety
Life Insurance
General Powers
3 years gift taxes paid
Life Insurance added to Estate (3)
Proceeds paid to executor
Decedent posses incident of ownership
Transferred policy within 3 years
Value of Gift- tax purpose
FMV on date of gift
Basis of Gift
If FMV greater than donor basis, use donor’s adjusted basis
If FMV less than donor’s adjusted basis then:
If sale price above basis, there is gain
If sale price below FMV there is loss
If sale price between FMV and Basis no gain or loss
Deductible/ not taxable Gifts (5)
Gifts to spouse
Gifts to qualified charities
Payments made directly to educational institution
Payments made directly to medical care provider
Gifts to American political parties
Gifts rules for Estate tax purposes (4)
Gifts are taxable that exceed annual exclusion
Taxable gifts added to taxable estate
Gift taxes paid are credit against tentative tax
Gift taxes paid within 3 years of death added to gross estate
Power of Attorney (3)
Traditional, non-durable- authority ceases with principal not competent
Durable- authority continues with principal incompetent
Springing- no authority until incompetency
Powers of Appointment for Trusts (3)
Special Power- with consent of creator or person having substantial adverse interest
Ascertainable Standard- (HEMS) Relating to health, education, maintenance, or support
General Power- holder may exercise authority however they wish
General Power- Gift Tax Implications (2)
Exercised, released, or lapsed- taxed
Lapses with 5 or 5 power- not taxed
General Power- Estate Tax Implications (2)
Exercised, released, or lapsed- taxed
Exercised, released, or lapsed with 5 or 5- greater of 5 or 5 is taxed
5 or 5 Power- Estate or Gift tax implication
Property subject to general power is included in donee decedent’s estate (or considered taxable gift) only in amount over:
Greater of $5,000 or 5% of total value of subject property
Tainted Grantor Trust (2)
Grantor retains:
A right to income or to use enjoy trust property
A reversionary interest exceeding 5%
Trust Ownership (2)
Trustee holds legal title to property
Beneficiary has equitable title to property
Simple Trusts (3)
Conduit or pass through of income:
2503b
Marital
QTIP
Crummey Trust facts (2)
Irrevocable trust with demand rights (given to minor through guardian)
Beneficiary has right to demand withdrawal that is the lesser or the amount of annual gift exclusion or the value of the transferred gift
Nonmarital B Trust (Bypass) facts (3)
Property transferred at death
Can be structured to provide income stream
Decedent has postmortem control
QTIP C Trust (current income) facts (4)
Provides surviving spouse with stream of income
Property qualifies for marital deduction
Mainly used for second marriages
Decedent has postmortem control
Qualified Domestic Trust (QDT/QDOT) facts (3)
No unlimited marital deduction
No estate tax due
$100k gift between spouses
Present Interest Gift vehicles (3)
UGMA/UTMA
2503C trust (2503b is future interest)
Section 529 college savings plan
5% income to donor trusts
CRAT/CRUT
No 5% income to charity trusts
CLAT/CLUT
Intrafamily Transfers with income to Property Owner (PIGS)
Private Annuity
Installment Sale
GRAT/GRUT
Self Canceling Note
Intrafamily Transfers with property/ income to family
Partnership/ S Corp
Family Limited Partnership
Gift Leaseback
Qualified Personal Residence Trust
Disclaimer requirements (2)
In writing within 9 months
Accepted no interest
Postmortem Planning- Estate Liquidity (2)
Stock Redemption (section 303)
Installment payment of estate taxes (section 6166)
Stock Redemption (section 303) requirements (3)
Must be closely held and incorporated
Value of business must exceed 35% of gross estate
Redemption cannot exceed estate taxes plus admin expenses
Installment payment of estate taxes (section 6166) requirements (2)
Value of business must exceed 35% of adjusted gross estate
4 years interest only- total 14 year repayment
Postmortem Planning - Estate tax reduction- Special Use
Special Use Valuation (section 2032A)
25% of gross estate consists of real property
Must be in qualified use 5 out of 8 years before and 10 years after death
Special Powers of appointment subject to estate/gift tax?
No
