Exam 18: The Federal Gift and Estate Taxes

In 2000,Irv creates a revocable trust,income payable to his children for life,remainder to his grandchildren.In 2010,Irv relinquishes the power to revoke the trust.If Irv dies in 2012,the trust is not included in his gross estate.

At the time of her death in 2012,Sophia was a participant in her employer's qualified pension plan.Her accrued balance in the plan is: Sophia also was covered by her employer's group term life insurance program.Her policy (maturity value of $100,000)is made payable to Aiden (Sophia's husband).Aiden is also the designated beneficiary of the pension plan.

For estate tax purposes,what is the difference between a surviving spouse's share of the community property and a dower (or courtesy)interest?

The use of the election to split gifts under § 2513 is not necessary for spouses who live in community property states.

At the time of his death,Hal owned 10 cemetery lots worth $40,000 ($4,000 each)for use by himself and his family.These lots are not included in Hal's gross estate and no deduction is allowed the estate.

Which of the following is not a characteristic of both the Federal gift tax and the Federal estate tax?

A surviving spouse's share of the community property is not included in the deceased spouse's gross estate.

At the time of her death on June 6,2012,Mary owned the following assets. As to these transactions,how much is included in Mary's gross estate?

In some cases,the Federal gift tax can be imposed on someone other than the donor.

Interest on state and local bonds is subject to the Federal estate tax.

By his will,all of Rusty's property passes outright to his wife,Patsy.As Patsy was not given a general power of appointment or Rusty's executor did not make a QTIP election,Rusty's estate is not allowed a marital deduction.

Since the credit for state death taxes paid (under § 2011)has been eliminated,no tax relief is available to an estate that is subject to both Federal and state death taxes.

Concerning the election to split gifts under § 2513,which of the following statements is incorrect?

Walt dies intestate (i.e. ,without a will)in the current year with a gross estate valued at $4,000,000.Under applicable state law,Walt's property passes to Kelly or to Belle,in that order.Kelly has an estimated net worth of $3,000,000 while Belle has none.From a tax planning standpoint,what course of action might be advisable.

Frank owns an insurance policy on the life of Cynthia,with Leon as the designated beneficiary.Upon Cynthia's prior death,Frank is treated as making a gift of the insurance proceeds to Leon.

A husband and wife make a gift of their jointly owned vacation home to their adult children.The gift-splitting election must be made.

Death does not defeat a deceased spouse's interest in a tenancy by the entirety.

At the time of Clint's death in 2012,part of his estate consists of the following. Under Clint's will,all of his property passes to his wife,Jennifer.How much marital deduction is Clint's estate allowed?

Jacob and Emma are husband and wife and have always lived in New Jersey,a common law state.In 1992 and using separate funds,they bought an annuity from an insurance company-the purchase price was furnished 1/4 by Jacob and 3/4 by Emma.Under the terms of the contract,Jacob is to receive $50,000 per month for life when he reaches age 65.If Emma survives Jacob,she is to receive $30,000 per month for her life.Jacob dies first in 2012,at which time the value of Emma's survivorship annuity is $1,400,000.As to this annuity,how much (if any)is included in Jacob's gross estate?

Generally,property that passes to a surviving spouse that is not a U.S.citizen does not qualify for the marital deduction.