Estate Planning

Question 1

What does not get counted on the ADV date when the ADV election has been made?

Answer 1

Depreciating assets whose value declines over time do NOT qualify for this treatment and must be valued using FMV on date of death.
Examples include:
cars,
patents,
life estates, or
remainder interests,
intellectual property

Question 2

What is a standby trust used for?

Answer 2

to manage a person’s assets if they become incapacitated.
In a Standby Trust, the Grantor is the Trustee and Beneficiary. A Successor Trustee steps into the Trustee role when the Grantor is incapacitated.

Question 3

How long do payments under a private annuity last and is it secured?

Answer 3

life of seller; no

Question 4

How long do payments last under an installment note and is it secured?

Answer 4

fixed term; yes

Question 5

How long do payments last under a SCIN and is it secured?

Answer 5

fixed term; yes

Question 6

What is the impact on the sellers gross estate with an installment note?

Answer 6

PV of unpaid installments may be included

Question 7

What is the impact on the sellers gross estate with a SCIN?

Answer 7

note is cancelled at death. Transferred property removed from gross estate

Question 8

What is the impact on the sellers gross estate with a private annuity?

Answer 8

If PMTs over joint lives, PV of remaining PMTs are included in decedent’s estate

Question 9

What is eligible for annual exclusion is a 2503(b) trust?

Answer 9

actuarial value of the income interest. Not the value of the income and principal.

Question 10

What is eligible for annual exclusion is a 2503(c) trust?

Answer 10

the entire gift to the trust

Question 11

What is an a trust?

Answer 11

A marital trust that provides the surviving spouse with a general power of appointment, access to income, and the ability to invade the trust corpus during life.

Question 12

what is a b trust?

Answer 12

A spousal trust that avoids “over-qualifying” the decedent spouse’s estate for the marital deduction, by utilizing the decedent’s lifetime exemption amount ($12.92MM in 2023). Allows the surviving spouse to obtain income as needed. Trust assets are not included in the surviving spouse’s estate at death.

Question 13

what is a qtip trust?

Answer 13

Provides the beneficiary spouse with income for life, qualifies the trust property for the marital deduction and gives trust corpus to children from a previous marriage.

Question 14

Disclaimer Trust

Answer 14

An estate planning technique in which a married couple incorporates an irrevocable trust in their planning, which is funded only if the surviving spouse chooses to “disclaim,” or refuse to accept, the outright distribution of certain assets following the deceased spouse’s death.

Question 15

Why is ascertainable Standard added to trust?

Answer 15

to give the trustee guidance as far as when and how they need to make distributions to the beneficiaries. A trustee can make distributions to a beneficiary for health, education, maintenance, and support (aka, the ‘HEMS’ standard).

Question 16

Estate Trust

Answer 16

Qualifies property for a marital deduction in the decedent’s estate. Used if the beneficiary spouse has substantial wealth and does not need the trust income or corpus.

Question 17

What is an estate planning technique that helps minimize a couples total estate tax liability for their combined estates?

Answer 17

Estate equalization.

Question 18

What trusts are used if the surviving spouse is to receive all income annually?

Answer 18

A or Q-TIP.

Question 19

What trusts are used if the surviving spouse is to receive all income on an if needed basis?

Answer 19

b or estate trust

Question 20

What trusts are used if the decedent spouse is to receive a marital deduction?

Answer 20

a, qtip, estate trust, an outright gift to the spouse

Question 21

What trusts are used if the surviving spouse is the
choose trust beneficiaries?

Answer 21

A or estate trust

Question 22

What trust is used if the surviving spouse wants to determine what portion of the decedent’s estate to transfer into a trust to use the decadents unified credit?

Answer 22

disclaimer trust

Question 23

What estate planning technique is used when the surviving spouse can access trust income for health, education, maintenance, and support (HEMS) without including the assets in their estate?

Answer 23

ascertainable standard

Question 24

For gift annuity payments made to a spouse, ____ is available if the spouse receives all annuity payments and has general POA over payments after the donor’s death.

Answer 24

a marital deduction

Question 25

What is any distribution of income or corpus from a trust to a skip person that is not otherwise subject to estate or gift tax.

Answer 25

a taxable distribution

Question 26

Is life insurance policy owned by the decedent who was not the insured subject to probate?

Answer 26

yes

Question 27

Is the marital deduction available for TIP?

Answer 27

NO

Question 28

Is TIP a gift?

Answer 28

Yes

Question 29

Can the donor spouse gift split with a TIP?

Answer 29

NO

Question 30

Can the donor spouse take an annual exclusion with a tip?

Answer 30

yes

Question 31

Can the donor spouse take a marital deduction with a tip?

Answer 31

no

Question 32

what are the TIP estate tax consequences?

Answer 32

Spouses who receive TIP will not include the property in their gross estate at death.
Spouses who gift TIP will remove the property from their estate.

Question 33

A marital deduction is not available for Terminable Interest Property (TIP) unless there is an exception:

Answer 33

General Power of Appointment, or
Qualifying the Terminable Interest Property (Q-TIP election).

Question 34

who pays for income earned by a CLAT that is not distributed to the charity?

Answer 34

the grantor

Question 35

What type of GST transaction occurs when the corpus was not subject to estate or gift tax

Answer 35

A taxable distribution