VIII. Federal Estate and Gift Tax

Question 1

Basics

Answer 1

• Wealth Transfer Taxes will be on both the fedearl and state level
• FEDERAL:
  
  • personal estate tax exemption of $5mil
  • over this amount, taxed at 40%
  • married couples: $10 mil through combined exemption
  • Bequeathing b/w spouses exempted

Question 2

Gifts and Gros Estates Definition

Answer 2

gift occurs whenever a donor has mate a GRATUTIOUS ransfer without FULL & ADEQUATE CONSDIARTION.

also necessary that the donor surrendered all control over the gift

Question 3

Rates of Gift Tax

Answer 3

• annual exclusion of 13,000 for each donee of gift (meaning 1 person may receive 13k untaxed)
• $5 million personal exemption may be used to offset any tax over the 13k
• Ulmitied exclusion for payment of tuition and medical expenses

Question 4

Deductions on Estate

Answer 4

1. will not be taxed on any amount that passes by will or intestacy to LEGAL SPOUSE through MARITAL DEDUCTION
2. Will not be taxed on amy amount passing to CHARITY through CHAIRTABLE DEDUCTION

these both are able to be used for gifts to spouse or charity

Donor has responsibility to pay tax; if not paid, donee has responsibility

usually administrator pay before distribution

Question 5

Taxability of Property Subject to a Power of Appointment

Answer 5

• Decedent includes in his gross easte any property over which the decedent had right, either alone or in conunction with any perosn, to designate the person who shall possess or enjoy property or income.
• Includes that property that he held a general, but not a special power
  
  • generall allows him to exercise in favor of his or herself, his or her estate or his or her creditors
• To pass it, must expressly mention it in the will
  
  • even if not mentioned, it is part of his estate for tax purposes
  • If it were a special power of appointment OR limited to health, support or maintenance, would have not been taxable