Estate Planning

Question 1

Bypass Trust.

Answer 1

• makes full use of the applicable estate tax credit upon death
• wants to make sure that husband has access to her property
• AKA credit shelter trust

Question 2

net gift

Answer 2

where the donee pays the gift tax on the property

Question 3

non-citizen spouse special annual exclusion

Answer 3

$164,000 annually

Question 4

tax form for split gifts

Answer 4

form 709

Question 5

gift of community property

Answer 5

• do not require gift splitting

- not subject to gift splitting

Question 6

lifetime gift tax applicable exclusion amount

Answer 6

4,769,800

Question 7

first $1M of tax due is

Answer 7

345,800

Question 8

Taxed at gift tax rate ($345,800)

Taxed at 40% ($4,769,800)

Answer 8

1st $1M
Next $11, 060,000
TOTAL: $12,060,000

Question 9

Gifts of Future Interest

Answer 9

• are 100% taxable

Question 10

5/5 Lapse Rule

Answer 10

• a taxable gift is made when either the greater of 5% or $5k has been withdrawn

Question 11

unlimited Charitable deduction (UCD)

Answer 11

• fed, state, local gov for public use

- 501c3 corps exclusively for religons, chartibale, science, literary, educa purposes

Question 12

gift tax filing date

Answer 12

april 15th or extension date

Question 13

Gross Estate Inclusion

Answer 13

= value of annuity at decedents death * (decedents cost basis / total annuity cost basis)

Question 14

Valuation included in decedents GE

Answer 14

= (trading Price AFTER decedents DOD * # of days betwn DOD and 1st preceding trade) + (trading Price BEFORE decedents DOD * # of days btwn decedents DOD and next trade)
_______________________________________________________________________________

sum of days before and after the DOD

Question 15

AVD

Answer 15

= value 6 months after the DOD

= include wasting assets (annuities, notes, royalties, lease income)

Question 16

Estate Tax Calculation

Answer 16

Gross estate 
- last medical exp
- admin exp
- funeral exp
- debts of the decedent
- losses during estate admin
= Adjusted Gross Estate
- state death tax deduction
- UMD
-UCD
= taxable estate
\+ post 76 taxable gifts
= tentative tax base
- credit for previous tax paid
- applicable estate tax credit
- credit for tax paid on prior transfers
- foreign death tax credit
= FEDERAL ESTATE TAX LIABILITY

Question 17

FTP

Answer 17

FTP
- (FTF - FTP)
________
penalty

always calculate FTP first

Question 18

Nursing Home Look back Period

Answer 18

= amount of $ gifted in 5 years / cost of the nursing home

Question 19

Transfer to a revocable trust

Answer 19

• transfer is not considered a completed gift

Question 20

Transfer to an irrevocable trust

Answer 20

• transfer is considered a taxable gift

Question 21

GSTT

Answer 21

an issue for irrevocable trusts NOT revocable trusts

Question 22

2503c trust

Answer 22

choir boy trust
complex trust
A trust which allows the trustee discretion to distribute or accumulate current income
A trust which allows a beneficiary a limited noncumulative right to demand.

Question 23

2503b trust

Answer 23

bad boy trust

simple trust

Question 24

Trusts with HEMS provisions

Answer 24

ILIT

Bypass trust

Question 25

A charitable pooled income fund

Answer 25

This estate planning tool is created and managed by a qualified charity to provide a variable income stream (based on portfolio performance) to non-charitable beneficiaries

operates similarly to a mutual fund

Question 26

a sale technique that is secured

Answer 26

SCIN

Question 27

a sale technique that is NOT secured

Answer 27

private annuity

Question 28

“S”CIN

Answer 28

“S”ale

“S”ecured

Question 29

Section 6166 election

Answer 29

the ownership asset must make up at a minimum of 35% of the estate

Question 30

irrevocable trust with life interest income to a beneficiary

Answer 30

100% included in the GE regardless of irrevocability

Question 31

Trust payment amount included as GI:

Answer 31

= (amount paid to bene / total amount distributed) * distributable net income

Question 32

Distributable net income of a trust

Answer 32

= dividends + interest income

Question 33

The CRAT

Answer 33

is subject to the probability test.

Question 34

testamentary trust

Answer 34

Is created under a last will and testament
The assets are included in the gross estate
It is included in probate

Question 35

indicates that a sale and leaseback arrangement might be advantageous

Answer 35

cash flow needs

Question 36

Installment Notes in a Gross Estate

Answer 36

• do not receive a new tax basis because they are IRD property and do not get a step up basis

Question 37

estate freeze

Answer 37

Any property transferred would be appreciating in value and the future gain would occur in the transferee’s estate

Question 38

AB Trust max contribution

Answer 38

$16,300,000

Question 39

charitable contribtuion deductions

Answer 39

ONLY MATERIALS

Does not include time, rental of space

Question 40

U.S. resident alien estate tax return

Answer 40

not required unless the decedent’s gross estate, plus adjusted taxable gifts, exceeds the applicable exclusion amount ($12,060,000 for 2022)

Question 41

Installment note receivable with payments being made post mortem

Answer 41

Installment note receivable is an IRD asset

does not avoid probate

Question 42

GRAT

Answer 42

saves the largest amount of transfer taxes if the grantor survives the trust term.

Question 43

ascertainable interest for a gift

Answer 43

= gift of PV

Question 44

gift tax paid

Answer 44

only included in GE on the gifts made < 3 years before death

Question 45

Guardianship

Answer 45

Always #1 priority for estate planning no matter the debt or CF situation