Estate

Question 1

Probate Calculation Shortcut

Answer 1

• add all assets subtract out non-community property, then divide by 2. Once solved, add back non-community property items

Question 2

Best way to leave assets to each other outside of marriage

Answer 2

• revocable trust or tenants in common
• a will or joint tenants with right of survivorship are INEFFECTIVE

Question 3

Appropriate Gift Property: Highly to Appreciate

Answer 3

• donate to charity

Question 4

Appropriate Gift Property: Likely to Appreciate

Answer 4

• gift to remove future value

Question 5

Appropriate Gift Property: Income Producing

Answer 5

• gift to someone in a lower tax bracket

Question 6

Appropriate Gift Property: Loss Property

Answer 6

• sale to take loss and gift proceeds

Question 7

Appropriate Gift Property: Property Subject to Depreciation

Answer 7

• keep until fully depreciated

Question 8

Appropriate Gift Property: Out-of-State Property

Answer 8

• gift to avoid ancillary probate

Question 9

Net Gift Calculation

Answer 9

• net gift = [gift tax / 1.4]
• cannot use without using $12,920,000 lifetime exemption first

Question 10

Generation Skipping Transfer Tax Calculation

Answer 10

• generation skipping transfer tax due = total estate - [$12,920,000 + estate tax due] x 40%

Question 11

Who pays Generation Skipping Transfer Tax

Answer 11

• direct = transferor
• termination = trustee
• distribution = transferee

Question 12

Estate Tax Due with Income in Respect to the Deceased

Answer 12

• estate tax due = [federal estate tax WITH income in respect to the deceased] - [federal estate tax WITHOUT income in respect to the deceased]

Question 13

A Trust

Answer 13

• marital trust
• power of appointment trust
• spousal trust

Question 14

B Trust

Answer 14

• non-marital trust
• credit shelter trust
• unified credit trust
• family trust
• bypass trust

Question 15

C Trust

Answer 15

• qualified terminal interest property (QTIP) trust
• current interest trust

Question 16

Generation Skipping Tax Calculation

Answer 16

• [estate - (exemption - estate tax due) = GSTT]

Question 17

Assets Subject to Probate

Answer 17

• singly owned assets (individual ownership)
• property held tenants in common
• assets where beneficiary is the “estate of the insured”
• 50% of community property

Question 18

Defective or Tainted Trust for Estate Tax Purposes

Answer 18

• reversionary interest that exceeds 5% measured at time of death
• right to income or enjoyment of the trust property
• it is not good to taint a trust for estate tax purposes

Question 19

Defective or Tainted Trust for Income Tax Purposes

Answer 19

• a reversionary interest that exceeds 5% of the trust value at the time of creation is retained by grantor or grantor spouse
• power to control the beneficial enjoyment is held by grantor or grantors spouse
• good to lower tax bracket

Question 20

Simple Trust

Answer 20

• 2503(b), QTIP, QDT, dynasty trusts
• income is distributed
• income is taxed to the beneficiaries
• corpus is distributed at termination
• no charitable gifts
• only dividends are distributed

Question 21

Complex Trusts

Answer 21

• 2503(c)
• income must or may accumulate
• accumulated income is taxed to trust
• income distributed is taxed to beneficiaries.
• corpus distributed per trust terms
• charitable gifts are permitted

Question 22

Can have HEMS and 5 or 5 provisions

Answer 22

• life insurance trust
• b trust
• c trust

Question 23

Subject to Estate Tax at Second Spouse’s Death

Answer 23

• a trust
• c trust

Question 24

Assets pass using $12,920,000 Exemption

Answer 24

• b trust

Question 25

Assets pass by Marital Deductions

Answer 25

- a trust - c trust

Question 26

Gifting using Crummy Provisions

Answer 26

- life insurance trust - death benefits passes tax free

Question 27

Reverse QTIP

Answer 27

- going to grandkids - keeps GSTT exemption from being lost

Question 28

Minimum 5% Distribution Rule

Answer 28

- CRAT - CRUT - private foundations

Question 29

No 5% Distribution Rule

Answer 29

- pooled income fund - charitable gift annuities - CLAT/CLUT

Question 30

Additions Allowed (Charitable Transfers)

Answer 30

- CRUTs - pooled income

Question 31

Any Charity Allowed (Charitable Transfers)

Answer 31

- CRAT - CRUT

Question 32

Specific Charity Allowed (Charitable Transfers)

Answer 32

- pooled income - charitable gift annuities

Question 33

Fixed Payments (Charitable Transfers)

Answer 33

- CRAT - charitable gift annuity

Question 34

Variable Payments (Charitable Transfers)

Answer 34

- CRUT - pooled income

Question 35

QPRT Keys

Answer 35

- large residence - 10+ years of life expectancy - donor continues to live in house - larger than exemption estates

Question 36

Gift Leaseback Keys

Answer 36

- conduit income - depreciation - 23+ years

Question 37

Liability of GST tax (Who Pays)

Answer 37

- direct skip = transferor/donor - taxable termination = trustee - taxable distribution = transferee

Question 38

Installment Payment of Estate (6166) Safe Answer

Answer 38

- closely held business

Question 39

Increasing Basis on Appreciated Gift

Answer 39

- must be appreciated properly - gift tax must have been paid by donor