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Exam 14: Transfer Taxes and Wealth Planning

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Question 31

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Which of the following is a true statement?

A) A remainder interest held by the decedent at the time of death is not included in the decedent's gross estate.
B) The value of a remainder interest depends in part on the Section 7520 interest rate at the time of death.
C) The value of a remainder interest in a life estate is independent of the age of the life tenant.
D) The value of a life estate does not depend upon the age of the life tenant.
E) None of the choices are true.

F) A) and C)
G) A) and B)

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Question 32

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The applicable credit is designed to allow a minimum amount of lifetime transfers without triggering the imposition of a transfer tax.

A) True
B) False

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Question 33

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When creating an estate tax planning strategy,the income tax benefit derived from a step-up in tax basis on assets should be measured against the estate tax cost of including the assets in the decedent's gross estate.

Harold and Mary are married and live in a community property state.During the marriage Harold bought a parcel of real estate for $100,000 in community funds and titled the property in his name alone.Mary died on January 30^th of this year and was survived by Harold who did not remarry.The parcel of real property was worth $250,000 on January 30^th of this year but was only worth $220,000 at year end.What amount,if any,is included in Mary's gross estate?

Both spouses must consent to any gift-splitting election.

The tax rate schedule on taxable transfers has a maximum tax rate of 40% for 2017.

Chloe's gross estate consists of the following property valued at the date of death: Chloe's real estate is encumbered by a mortgage of $450,000,and Chloe's executor paid her funeral costs of $6,000 and charged fees for $24,000.Which of the following is a true statement?

Which of the following transfers is a completed gift?

At his death in 2017,Nathan owned the following property: The real estate is subject to a $1,700,000 mortgage and Nathan made taxable gifts in 2009 totaling $2 million at which time he offset the gift tax with an applicable credit (exemption equivalent of $2 million).Nathan has never been married.What is the amount of his estate tax due? (Use Exhibit 14-1)

A transfer of a terminable interest will not generally qualify for a marital deduction.

James and Jasmine live in a community property state.This year they transferred $800,000 of property to an irrevocable trust that provides their son,Aaron,a life estate and their daughter,Lauren,the remainder.At the time of the gift,the Table S value for Aaron was .18031.What is the amount,if any,of the taxable gifts?

Gabriel had a taxable estate of $6 million when he died in 2017.Calculate the amount of estate tax due (if any)if Gabriel made prior taxable gifts in 2005 totaling $1 million at which time he claimed an applicable credit of $1 million and paid no tax.Gabriel was unmarried at his death.(Use Exhibit 14-1)

A withdrawal of money from a bank account held in joint tenancy with the right of survivorship may constitute a completed gift.

At her death,Siena owned real estate worth $200,000 that was titled with her sister in joint tenancy with the right of survivorship.Siena contributed $50,000 to the total cost of the property and her sister contributed the remaining $75,000.What amount,if any,is included in Siena's gross estate?

Caleb transferred $115,000 to an irrevocable trust for Avery.The trustee has the discretion to distribute income or corpus for Avery's benefit but is required to distribute all assets to Avery (or his estate)not later than Avery's 21^st birthday.What is the amount,if any,of the taxable gift?

The annual exclusion applies to cumulative gifts made to each donee over the course of the year.

The debts of the decedent at the time of death are deducted in calculating the taxable estate.

Andrew and Brianna are married and live in Texas,a community property state.For their birthdays this year Andrew gave cash gifts of $20,000 to each of his two daughters,and Brianna gave $30,000 to her niece.What is the amount of Andrew's taxable gifts?

At her death,Emily owned real estate worth $2.5 million and other property worth $1 million.Property taxes of $200,000 were accrued on the real estate at the time of Emily's death.Which of the following is a true statement with respect to these items without considering any other owned property?

Ava transferred $1.5 million of real estate into an irrevocable trust for her son,Luis.The trustee was directed to retain income until Luis' 21^st birthday and then pay him the corpus of the trust.Ava retained the power to require the trustee to pay income to Luis at any time,and the right to the assets if Luis predeceased her.What amount of the trust,if any,will be included in Ava's estate if she died shortly after making the transfer?