Estate Planning Flashcards
Step up in basis: community property vs. joint tenancy
Community property gets a full step up in basis at death. JT only gets a half step up.
Can Tenancy by the Entirety be disclaimed?
NO it cannot.
Can Joint Tenancy be disclaimed?
YES it can.
Would a testamentary trust go through probate?
No
What type of property does ancillary probate affect?
Real property
Revocable Trust vs. Durable Power
Rev trust continues after death, durable power expires at death.
Why would a single life annuity NOT be included in the gross estate?
Payments stop at death
True or False: All probate assets are included in the gross estate.
True
How could a business owner gift business interests to family members?
Family Limited Partnerships, LLCs, gift closely held stock.
Gift Tax is Form _____
709
Estate Tax is Form ______
706
What is a big disadvantage of a nondurable power of attorney?
It does not survive incompetency.
When would a trust be taxed as a separate entity?
- Irrevocable
- Income is accumulated
True or False: The Bypass Trust qualifies for the marital deduction.
False
UGMA vs. UTMA
UGMA cannot hold real estate, UTMA can. UGMA must be funded with cash type assets.
Can additional assets be added to a CRUT and/or a CRAT?
Additional assets could be added to a CRUT, but not a CRAT.
Is Premium Payment of a Life Insurance Policy considered an “incident of ownership”?
No.
What is the main disadvantage of an installment sale?
If the seller dies during the sale period, the remaining assets will be included in their estate.
GRAT / GRUT Definition
Irrevocable trusts that allow the grantor to make gifts of property while retaining an income interest. The owner must outlive the term of the trust.
QPRT
An irrevocable transfer of a personal residence that the owner can still live in and at the end of the term of the trust the residence is removed from their personal estate.
When would an ILIT be considered “tainted”?
If it is used to pay premium and support of the grantor. Will be taxed to the grantor in that case.
True or False: The GST is also subject to gift tax.
True
Would gift tax payable be a deductible item from a gross estate?
Yes it would.
True or false: Pour-over will assets will not be included in the gross estate.
False, they will be
UTMA vs. Children’s Trust (2503(c)) - What is the Tax difference?
UTMA is taxed to the child, which is generally a more favorable rate than the Trust tax rate.
Who appoints a guardian?
The Court
A donor advised fund is controlled by an individual donor or a group of various donors?
An individual donor
Is tenancy by the entirety deducted from the gross estate?
Yes, because it goes to the surviving spouse.
