Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

CFP Review > Estate Planning > Flashcards

Estate Planning Flashcards

You may prefer our related Brainscape-certified flashcards:
CFP® flashcards
0
Q

If a Giftor gift to beneficiary but then the beneficiary dies within first year

A

Original basis is original donor basis

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
1
Q

QDOT

3

A

1) Trustee must be US citizen or US corporation
2) all income annually must be distributed to surviving spouse
3) appropriate when surviving is a non US citizen

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

FLP

3

A

Family Limited Partnership

  • grantor retains General Partnership transferring limited partnership to family members
  • a discount for minority interest may be used for value
  • used for appreciating assets
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

How are dividends declared on death
706

4

A

After declaration date but before EX date =ignore

After EX date but before record date = dividend added to stock price on Date of Death

If after record date but before payout =. Declared separately on 706

If after payout =. You can ignore

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

RMD Due Date

A

If you turn 70.5 second half of year = use year end value for next year and report before April 1st using 70 calculation

If you turn 70.5 first half of year you can defer to next year 4-1 and use 71 calculation but must take two distributions that year.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What amount is considered a gift in a GRAT OR A GRUT

A

FMV - PV of retained interest by the Grantor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

DNI

A

Distributable Net Income

Established amount taxable to beneficiaries

Capital gains are not included in DNI calculation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Calculating Gross estate to get to taxable estate

8

A

Funeral expenses

Administrative costs

Unpaid mortgages

Debts and unpaid taxes

Casualty losses

Charitable contributions(unlimited)

Transfer to surviving spouse

State death taxes.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Private Annuity

A

Transfer business and provides income to family

Deduction to donor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is a Skip Person

3

A
  • grandchild
  • unrelated person breather than 37.5 years younger
  • trust with grandchild as beneficiary

NOT=spouse or former spouse if your child is deceased and money goes to grandchild

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Section 303

A

Stock redemption

1- redeem stock as a capital Gain not a dividend

  • stock has to be greater than 35 percent of defendants gross estate
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Section 6166

A

Deferred payment of estate tax

  • closely held business or Farm
  • greater than 35% percent of gross estate
  • can defer taxes from year 6-16(defer 5 years for 10 years)
  • interest penalties will be paid on deferral
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

2032A

A

Special Use Valuation

  • farm or closely held business reduce valuation
  • aggregate deduction can’t exceed 1,090,000
  • value of property must be greater than 50 %percent of gross estate
  • 5 of 8 years material participants
  • land must be for qualified use for at least 10 years after dependents death
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Recapitalization

2

A
  • common stock traded for preferred stock and non voting stock
  • Senior member keeps the voting power
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Private Foundation

4

A
  • tax exempt charitable organization
  • created by a family or coir portion

-taxes= 30% deduction for cash contributions
20% LTCG for donated property

-keep control

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

CLT

3

A

Charitable Lead Trust

  • income is transferred from the trust to the charity but leaving corpus to the family
  • PV of the interest is a deduction to the grantor
  • used for people with no income need
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

CRT

4

A

Charitable Remainder Trust

  • irrevocable
  • CRATS OR CRUTS
  • last for life of grantor for up to 20 year
  • payout must be 5-20 percent
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Pooled Income Fund

5

A
  • irrevocable trust to a public charity
  • managed by charity
  • income for goes i donor and maybe 1 more beneficiary for life
  • can’t invest in munis
  • payment to donor based on earnings
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

GRAT

8

A

Income to Grantor for life

Gift is the FMV-PV of the income

Corpus passes to beneficiary(not charity)

Fixed payments annually that can’t exceed 120% of previous year

Used if grantor is suppose to outlive term

Taken out of grantors estate if he lives last terms

Gift of future interest so no annual exclusion

Irrevocable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

QPRTS

8

A

Qualified Personal Residence Trust

Grantor lives in the residence for term

Only 1 resident

Family only

Income to term holder

Can covert to GRAT

Can be repurchased by donor

Used for appreciating assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

How is a trust taxed?

A

Beneficiary is taxed in distribution

Distribution deductions is the lesser of the net investment income or amount distributed to beneficiary

Income distributed keeps the same characteristics(example tax exempted)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Blind trust

A

Created to avoid conflicts of interest

Used by Government officials

Certified by the board of Government officials

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Dynasty Trust

A

Avoids GSTT

Passes life insurance to granchildren

23
Q

Standby Trust

A

A springing trust based on an event(revocable)

24
Q

Complex Trust

A

Anything that is not a simple trust

Simple trust pays income annually and is not charitable and can’t distribute corpus

25
Q

What options does an Alien spouse have at decadent spouse death?

3

A
  • no marital deduction allowed
  • if become a citizen before date 706 is filed you can get deduction
  • if asset are in a QDOT qualified domestic trust you can get martial deduction
26
Q

Rules against perpetuity

4

A
  • trust can’t have infinite life
  • can’t last longer than 21 year longer than the death of the youngest beneficiary
  • creation date if different for irrevocable and revocable

Irrevocable creation date is date created
Revocable creation date is date it becomes irrevocable

-charitable trust are exempt from perpetuity

27
Q

Testementary trust

4

A

Springing at death from will

Not subject to gift tax because created at death

Subject to probate

Advantages
Revocable at life can make changes
Can provide income and distribute corpus
Can have different GP of appointment to control assets

28
Q

Qualified Disclaimers

3

A

Must be in writing

Asset pass to next beneficiary with no benefits from assets

Must be filed by time 706 is filed

29
Q

How do you calculate stock price on date of death

2

A

If the stock didn’t trade = get trade day before and day after and average by how many days away from date of death.. Then divide by total number of days

If stock did trade that day you take the average of the high and the low

30
Q

2503C

4

A

Income is discretionary

Must be distributed by age 21 of child

Trust pays income tax on I distributed gifts at trust rates

Trust doesn’t meet present interest gift rules

31
Q

Included in Gross Estate

10

A 
Annuities
Gift taxes paid in last three years
Assets owned by descendent 
Transfer on death
Transfer with retained life interest 
Revocable transfers
Joint property
Life insurance proceeds
Powers of interest
32
Q

Transfer not subject to gift tax

3

A

Divorce

Qualified transfer directly to medical or educational facility

Asset under annual exclusion 14/28

33
Q

Section 303

A

Used by C Corp if greater than 35 percent of gross estate IRS gives you favorable tax treatment

C Corps only

34
Q

2503 B

A

Educational trust

Required income annually trustee has no discretion

Not required to end at 21

Interest eligible for annual gift exclusion

Remainder interest not eligible for annual exclusion

35
Q

Plans integrated with Social Security

A

DBenfit plans
Profit Sharing
Sep
Keogh

36
Q

709

A
  • gift tax form
  • greater than annual exclusion 14/28
  • gift spitting needs to file(not in community property state)
37
Q

When do you have to file a 706

A

9 months

You can ask for a 6 month extension

38
Q

When is a joint bank account or saving bind considered gifted?

A

Gifted when withdrawn or redeems respectively

39
Q

Holographic Will

A

A written will which is witnessed and hand written and signed and dated

Not recognized in all states

40
Q

AVD

A

Alternative Valuation Date

Can use DOd value or AvD which is value 6 months after DOD

If AVD lower both gross estate and taxable estate the higher basis can be used. Must be chosen on the 706 form

Property sold after DOD but before AvD is date is sale.

IRD assets not able to use AVD- annuities, retirement plans, installment notes, patents

Can only be used is estate tax base is > 5,340,000

41
Q

Nuncupative Will

A

Oral Will not recognized in all states.

Used for Personal property not real property

42
Q

Gross Up Approach

A

Gift taxes paid in last three years that is added back to gross estate

43
Q

IRD Assets

6

A

Annuities

Retirement plans

Installment notes

Patents

Copyrights

Cash

44
Q

Bypass trust

A
  • assets in trust take advantage of the marital applicable credit amount because they do not qualify for marital deduction and are not included in surviving spouses gross estate.
  • surviving spouse gets income from trust for HEMS
    (Health, education, maintains cd, support)
  • when second spouse dies trust control goes to beneficiaries
45
Q

Crummy trust

A

Irrevocable

But gives BeBe dictators the right to withdraw a small amount for a small time period annually

46
Q

CRAT payments

3

A

Upon death of last income beneficiary or end of term not greater than 20 years the remained interest must be held for or paid to a qualified charitable organization

The amount must be paid annually to a non charitable beneficiary

The trust provides a fixed annuity worth not less that 5% of the INITIAL FMV(remember initial CRUTS pay off of FMV because they keep up with inflation)

47
Q

What does a “pour over” provision accomplish in a will?

A

Allows for transfer of assets intones trust created before the will.

Asset are subject to estate tax, probate, and not permitted to transfer to another persons estate

48
Q

Property in estate planning can be

4

A

Real property is land or anything permanently attached or affixed to it

Real property is anything other than personal property

Personal property is either intangible or tangible

Property interest can be present interest or future interest

49
Q

DNI and capital gains

A

Does NOT include capital gains. Capital gains are recognized as additions to corpus of the trust rather than income

50
Q

What is gift exclusion maximum to a non US citizen

A

145k

51
Q

Special use valuation

A

Decedent must be a US citizen

The combine real and personal property of the farm or closely held business must be at least 50% of the gross estate less certain expenses

Must pass to qualified heirs

Must be used as a farm or closely held business 5 out of last 8 years

52
Q

Crummy trust

3

A

Gift taxes to beneficiaries of the right to withdraw lapses and the amount exceeds the greater of 5% of corpus or $5000

Must received notification to withdraw

Withdrawal right is usually the lesser of annual exclusion amount or value of property

53
Q

A second to Die allows

A

Second to die allows one insured to be uninsurable

54
Q

If a person inherits property and then dies more than 2 years after the transferor’s death the credit for tax on prior transfer is

A

Reduced by 20% for each two year period in excess of two years

55
Q

What is a Totten Trust

A

When a bank account has an “in trust for”= beneficiary

CFP Review (5 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions