Estate Planning (2024)

Question 1

Quasi-Community Property

Answer 1

Property spouse acquired when they were not domiciled in a community property state

Question 2

Moving from community property to common law state

Answer 2

Community property retains its character when a couple moves to a common law stafe

Question 3

Fee simple recognition

Answer 3

Fee simple is presumed in common law states but is not presumed in community property law states

Question 4

Spouse’s industry (community property)

Answer 4

Refers to the effort, labor, or work of a spouse during the marriage that contributes to earning income or acquiring assets. Property acquired during marriage by either spouses industry is community property. 

Question 5

Devise

Answer 5

Specific bequest through a Will

Question 6

Surety bond

Answer 6

Bond that an administrator of an estate must generally post

Question 7

Letters of administration

Answer 7

Empowers an administrator to act as the agent of a probate court

Question 8

Letters testamentary

Answer 8

Empowers an executor to act as agent of a probate court

Question 9

Summary of the Installment Payment of Estate Tax (Section 6166)

Question 10

IRC Section 303

Answer 10

IRC Section 303 states that 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.

Limited to an amount that cannot exceed the death taxes of the state, plus funeral and administrative expenses for which the decedent is liable.

The rule is 35% of the gross estate including gifts made in the last three years.

The stock must be closely held, and it can be either common or preferred .

Can only be used if the corporation has the cash to redeem the shares. The earnings and profit account must be positive or there is no need for a 303 redemption. 

Question 11

Interest in trust

Answer 11

A person holds an interest in the trust, at the time the determination is made, the person:

Has a current right to receive income or corpus from the trust

Is a permissible current recipient of income or corpus from the trust (other than charitable entities) or

Is a charitable or other entity described in section 2055(a) and the trust is a charitable remainder annuity trust, a charitable remainder unitrust, or a pooled income fund

Question 12

Net gift

Answer 12

When the gift recipient agrees to pay the gift tax to reduce the gift value for tax purposes. The tax is to be paid out of the gift.

If the individual giving the gift has an adjustable taxable basis less than the tax paid, the transferor will have to recognize taxable income equal equal to the difference

Question 13

Completed gift

Answer 13

Intent, delivery, acceptance and relinquishment

Question 14

Reverse (revisionary) gift

Answer 14

The gift is given with the intention that the donor receive it back with a step-up in basis

Property is included in the donor’s gross estate.

Gift must be completed one year prior to the donee’s death

Question 15

Are political contributions subject to federal gift tax?

Answer 15

No! Regardless of any amount given

Question 16

Codicil

Answer 16

Document used to alter a will

Question 17

Devisee

Answer 17

Person who receives gift of real property through a will

Question 18

Legatee

Answer 18

Person who inherit property under the will

Question 19

Attorney in fact

Answer 19

A person or entity entitled to act on behalf of another.

The power of attorney appoints this person

Question 20

Abatement

Answer 20

Reduction in an estate when there is intervention assets to satisfy all legatee provisions

Question 21

Ademption

Answer 21

The destruction or extinction of a testamentary gift because the bequeathed assets no longer belong to the testator at the time of their death

Question 22

What is another word for the no contest clause?

Answer 22

In terrorem

Question 23

Power of attorney for healthcare

Answer 23

Address is the providing of medical care, but generally does not address the ending of life, sustaining treatment.

Question 24

Advanced medical directive (living will)

Answer 24

Address is the ending of life, sustaining treatment, but not the providing of medical care

DNR is not a replacement. It is an additional document that addresses the prevention of resuscitation and the event of heart failure for a terminally ill patient.

Question 25

What happens when a general power of appointment is exercised, lapsed or released?

Answer 25

It is considered a transfer of the property by the power holder for gift, estate, and generation-skipping tax purposes

Question 26

When must a qualified disclaimer be received by the executor of an estate?

Answer 26

Within nine months of the death of the decedent