Estate Planning

Question 1

The gift tax value of a whole life policy

Answer 1

• The FMV of the policy’s interpolated terminalreserve + the policy’s unearned premium

Question 2

Gift tax and GST combination

Answer 2

• if lifetime GST has been used, calculate the GST tax first
• then add to the value of the gift at the highest bracket
• example - $1 million gift, $400K of GST tax
• $1.4 million x .40 = $560K
• total taxes are $560,000

Question 3

Tax implications of a sale-leaseback using an installment payment method

Answer 3

• the transferor may not be able to deduct lease payments made to a family member as ordinary and necessary business expenses
• a fully depreciated property that is transferred by sale-leaseback to a family member can nonetheless be depreciated by the new owner
• the transferor os a sale-leaseback may be subject to depreciation recapture in the year of the sale

Question 4

Tax forms for decedent

Answer 4

• 1040 - decedent’s Federaltax filing
• 1041 the estate tax return
• 706 used to determine the estate tax due

medical expenses can be deducted on the 1040 or the 706
executor fees may be deducted on the 1041 or the 706

Question 5

What assets are not terminable interests?

Answer 5

• life insurance
• Patents are considered a terminable interest

Question 6

What types of transfer vehicles would not be contestable?

Answer 6

• QPRT
• IRR Trusts
• Rev Trusts
• beneficiary designations