Estate Planning Flashcards
What’s included in the gross estate?
Property owned by decdent
General POApointment!
Life insurance DB when policy transferred w/in 3 years
Joint Tenancy property (half or percentage depending)
Joint and survivor annuities
Retained life interests
Retained power to amend or revoke
Revisionary interest
Gift taxes paid within 3 years of death
Are proceeds of life insurance included in the estate?
Proceeds that are a result of your death and received by the executor ARE included
If any incidents of ownership of the policy. Any rights
Is QTIP property included in gross estate?
Yes
What is at the alternate valuation date?
Executor must make this election
Either Date of death or alternate date
Can only use it if the election lowers the gross estate and the estate tax due
Election applies to all assets in the gross estate except for
- wasting assets
- assets disposed of between death and AVD
What is a wasting asset?
Annuity
Patent
What are deductions from the gross estate?
A Admin (lawyer fees, court costs, etc)
B Burial (funeral expense)
C Causalty losses during administration
D Debts (mortgage, cc, etc)
E Last medical expenses
What is the estate tax formula?
Gross estate
less deduction
Equals adjusted gross estate
less marital deduction
less charitable deduction
equals taxable estate
Plus post ‘76 gifts - added back to gross up
equals tentative tax base
What are tax credits for estate tax?
Prior transfer credit
Estate tax credit
Foreign death taxes credit
What happens to holding period for inheritance?
Always goes to long term
What are requirements for a donor to make a gift?
Competent
Must have the intent to make a voluntary transferred
ex: not a gift if sold a jewelry box and there was accidentally a ring in it
What are requirements for a person to receive a gift?
Competent
Take the delivery
Accept the property
What are types of gifts?
Direct
Indirect (paying someone’s med expenses)
Complete
Incomplete (trust)
Reversionary interests
Net gift - when the donee agrees to pay the gift tax
How are gifts valued?
ON the date of the gift
Real estate - appraisal
securities - valued at the average high and low trading price for the day
Bonds - PV of expected future payments
Your gift may be discounted if there is a lack of marketability, liquidity, or control (ex: closely held business)
What is the super annual exclusion?
Specifically for a non-US spouse
What are the rules for split gifts?
Requires gift tax (form 709)
married spouses can elect to split gifts
Must be elected for all gifts that year
Only counts for the time they were married
What is a future interest gift?
What is a crummy provision?
Allows the trust beneficiary to withdraw some o any contribution to a trust for a limited period to create a present interest
Typically 30 days
What is a qualified transfer?
a payment for someone else paid directly to qualified educational institution or medical care
Must be paid directly
DOES NOT count toward annual exclusion
What are not gifts?
Alinomy
Support payments
Transfers in a business setting (these are compensation)
What is the marital deduction for gift tax?
unlimited as long as a US citizen
How are charitable gift
What is the amount of imputed interest on a below-market loan?
0-$10k — none
$10,001- $100k — Lesser of net investment income or interest calculated using AFT less interest student loan
-> if the NII is < $10k, $0 imputed interest
> $100k interest calculated using AFR less interest
What is a crummey provision?
The trust bene can withdraw from the trust for 30 days after the contribution
Used so that the gift to a trust is considered a present interest
What transfers don’t result in gift tax?
Gifts to political organization
Qualified transfer payment to education or medical
Payments for legal support
Payments as a result of divorce decrees
Transfers within a business setting
Unlimited marital deduction
Transfers to charities