Estate Planning Flashcards

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1
Q

Lifetime Exclusion amount

A

2023: $12,920,000

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2
Q

Taxable Estate over $1M

A

Tax: $354,800 + 40% on amount over $1M

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3
Q

Discretionary Power of Appointment

A

Trustee has discretion to give to beneficiaries for purpose of:
Health, Education, Maintenance and Support

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4
Q

Alternate Valuation Date

A

can use valuations 6 months after death
Must lower total gross estate and estate tax due
Applies to all Assets EXCEPT: wasting assets & assets disposed of between death and alt date

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5
Q

IRD Assets

A

Income in respect of a descendent
-income dependent was entitled to, but did not receive before death
- no step up in basis
Ex: IRAs, annuity payments, income earned not paid

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6
Q

Inter Vivos Trusts

A

trust created during life
avoids probate

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7
Q

testamentary Trust

A

trust created at death (per will)
does not avoid probate

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8
Q

GRAT

A

Grantor Retained Annuity Trust
pays fixed annuity to grantor for defined term, remainder to non charitable beneficiary(ies)
if grantor dies before term, included in estate

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9
Q

GRUT

A

Grantor Retained Unitrust
Pays fixed percent of assets each year that is revalued annually
not suitable for hard to value assets

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10
Q

QPRT

A

Qualified Personal Resident Trust
- transfers house to trust, ability to use home (rent after time)
Included in estate if dies before term ends
Only 1 residence per QPRT, person can have 2 QPRTs

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11
Q

Sec 2503 (b) and Sec 2503 (c) Trusts

A

trusts for minors
B: can hold assets for lifetime, income annually
C: Distrubute by age 21 (no income required)

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12
Q

ABC Trusts

A

A Trust: Power of Appointment Trust
B Trust: Credit Shelter/ Bypass Trust
C trust: QTIP Trusts

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13
Q

Pooled Income Funds (PIF)

A

charitable contributions pooled in a trust maintained by the charity
Income for life of donor, remainder to charity
can add contributions after established
Tax Deduction: property value less FMV of retained income

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14
Q

CRAT

A

Charitable Remainder Annuity trust
provides fixed income to donor and remainder gets paid to charity
- min 5% income, no more than 50% initial value
- life or up to 20 year term annuity
no additional contributions, invades corpus if insufficient assets
Deduction: value less retained annuity payments

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15
Q

CRUT

A

Charitable Remainder Unitrust

provides income to donor and remainder gets paid to charity
tax ded: value of property less interest retained payments
- income more flexible than CRAT
-income at least 5% of CURRENT FMV
- life or up to 20 year term annuity
additional contributions permissible

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16
Q

Life Insurance Objectives

A

Protect Income Stream
Source of Funds for Education
Liquidity at Death
Retirement Income
create or sustain family wealth

17
Q

IRC Section 303

A

the estate of a deceased shareholder may redeem enough shares to cover the death taxes (federal and state estate, inheritance, and generation-skipping transfer taxes), funeral expenses, and administrative expenses of the decedent, and the shares redeemed for this purpose will qualify for capital gains tax treatment.

18
Q

Disclaimer Clause

A
  • heir may disclaim and will go to other listed in disclaimer clause
    • disclaiming party cannot benefit
    • disclaiming cannot direct disclaimer
  • Spouse may disclaim so more assets go to kids and applicable estate tax credit is utilized
  • kids may disclaim so that surviving spouse may inherit to utilize marital deduction
19
Q

survivorship clause

A
  • requires beneficiary to survive the decendent for a specific period of time it inherit
    • cannot be longer than 6 months to qualify for marital deduction
20
Q

Crummy Provision

A
  • right of a trust beneficiary to withdraw some or all of any contribution to a trust for a amount of time (30 days)
  • may limit withdrawal right to an amount equal or less than annual exclusion
21
Q

GRIT (Grantor Retained Income Trusts)

A
  • created by a person who keeps an income interest in the trust
  • grantor will transfer property to the trust, retain income for period of time, and remainder is transferred to beneficiaries at end of term
22
Q

NonDurable / Limited Power of Attorney

A

Power ends when principal is no longer legally competent

23
Q

Durable Power of Attorney

A

authority continues after incompetence

24
Q

Springing Power of Attorney

A

Agent has no power until incompetency

25
Q

QTIP trust

A

Current Income trust
- Provides surviving spouse with income for life but deceased controls trust property after spouse dies
LAME
L- lifetime income for spouse
A- Annual payments to spouse
M- Mandatory payments
E- Exclusively for spouse

26
Q

Special use Valuation (Sec 2032A)

A

can elect to use current use value of property instead of FMV - cannot be reduced more than $1.31M
- Must be used in Farming or trade or business actively managed by decedent or family 5 out of 8 years before death