Estate Planning Flashcards
A will made in agreement with another person to dispose of certain property interests
mutual will
Each person’s will designates that all property be distributed to the other person (common with spouses)
reciprocal will
A hand-written will
holographic will
An oral will
nuncupative will
Is JTWROS included in probate?
no
A specialized form of JTWROS existing between spouses. The spouses own the whole interest collectively, with no undivided individual share
Tenants by Entirety (TBE)
For a will to be valid, you need testamentary capacity. List the 3 things needed for testamentary capacity:
- Testator must know they are creating a will
- Testator must be AWARE of what assets they own
- Testator must know and remember their relationships with the beneficiaries
When dying intestate, minor children will receive:
equal shares of their parent’s property (and will take ownership at their state’s age of majority)
In community property states, all property in intestacy passes to:
the surviving spouse
Within what time frame is AVD elected?
within one year of estate tax return filing
What are the exceptions to electing AVD?
depreciating assets whose value declines over time (ex: cars, patents, life estates, remainder interests)
This grants an agent the authority to make a broad array of decisions including legal, financial, or business.
Lapses as disability or incapacitation.
General Power of Attorney
This grants an agent the ability to act on behalf of the principal for a specific matter.
Once the task or action is completed, or a period has passed, the authority expires.
Special Power of Attorney
For gift splitting, if the total amount of the gift is less than $18,000, what are the filing requirements?
no filing required
For gift splitting, if the total amount of the gift is between $18,000 and $36,000, what are the filing requirements?
the donor spouse files Form 709
the other spouse shows consent on Form 709
For gift splitting, if the total amount of the gift is more than $36,000, what are the filing requirements?
both spouses file Form 709
The step-up for Community Property is:
100%
a full step up to FMV for the surviving spouse
Any distribution of income or corpus from a trust to a skip person that is not otherwise subject to estate or gift tax
taxable distribution
The termination by death, the lapse of time, release of power, or otherwise of an interest in property held in a trust resulting in skip persons holding all the interests in the trust
taxable termination
A transfer subject to estate or gift tax made to a skip person
direct skip
How do you identify a non-related skip person?
between 37 1/2 and 62 1/2 years younger than the transferor
How do you identify related skip persons?
2 or more generations below, identified by a family tree
What is the GST tax rate?
40%
The GSTT annual exclusion is:
$18,000
The GSTT separate lifetime exemption is:
$13,610,000
Property gifted within 3 years of the death of a donor is generally not included in the gross estate, with the exceptions of:
1)
2)
3)
4)
1) retained life estates
2) reversionary interestes
3) revocable trusts
4) life insurance policies owned by the insured
A trustee can make distributions from a trust within how many days of a new tax year?
65
Allows an executor of an estate and the trustee of a revocable trust to elect to treat the estate and trust as one for estate tax purposes
Section 645 Election
Used to manage a person’s assets if they become incapacitated
standby trust
When a person dies, you get a step-up in basis and what holding period?
long-term, no matter how long the decedent held the property for
What is the “appreciation factor” when calculating the new basis for gift taxes paid?
(FMV - Basis) / (FMV - Annual Exclusion)
When is Form 706 due?
within 9 months of the decedent’s death
Can a Simple Trust distribute principal during the tax year?
no
Can a Simple Trust distribute income during the tax year?
yes, it is required to distribute all accounting income to the beneficiaries in the year earned
Can a Simple Trust have a charitable beneficiary?
no
What is the Simple Trust personal exemption?
$300
Can a Complex Trust distribute principal during the tax year?
yes
Can a Complex Trust distribute income during the tax year?
there is no requirement to distribute income each year
Can a Complex Trust have a charitable beneficiary?
yes
What is the Complex Trust personal exemption?
$100
Transfers to irrevocable trusts are considered completed gifts, therefore potentially being subject to what kind of tax?
gift tax
What is the main objective in having an irrevocable trust?
asset protection
What is the main objective in having a revocable trust?
flexibility and control
Irrevocable trusts are a substitute for what?
a will; they have a stated beneficiary
Both irrevocable and revocable trusts avoid what at death?
probate
What kind of trust takes effect immediately?
inter-vivos trust
What trusts are created through a will upon death?
testamentary trust
Do revocable trusts have to be funded in order to be valid?
no; they can be funded or unfunded