Exam 25: Transfer Taxes and Wealth Planning

Alexis transferred $400,000 to a trust with directions to pay income to her spouse, William, for his life. After William's death the corpus of the trust will pass to William's son. If the life estate is valued at $72,000, what is the total amount of the taxable gifts?

A trust is a legal entity that can only exist for a year.

The gross estate will not include the value of clothes and other personal items owned by the decedent at the time of death.

At his death in 2018, 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 25-1)

Ricardo transferred $1,000,000 of cash to State University for a new sports complex. Calculate the amount of the taxable gift.

For 2018, the exemption equivalent for the estate tax is $11.18 million.

The gross estate includes the value of half of real property owned by a decedent and spouse in joint tenancy with the right of survivorship.

Property is included in the gross estate at the value a willing buyer would pay a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of the relevant facts.

Which of the following statements is (are) true for both gratuitous and testamentary transfers?

This year Maria transferred $600,000 to an irrevocable trust that pays equal shares of income annually to four cousins (or their estates) for the next eight years. At that time, the trust is terminated and the corpus of the trust reverts to Maria. Determine the amount, if any, of the current gifts and the taxable gifts if the relevant interest rate is 6 percent and Maria is married and elects to gift-split with her spouse?

Last year Brandon opened a savings account with a deposit of $45,000. The account was in the name of Brandon and Melanie, joint tenancy with the right of survivorship. Melanie did not contribute to the account, but this year she withdrew $18,000. Has Brandon made a taxable gift to Melanie, and if so, in what amount?

The Federal transfer taxes are calculated using cumulative lifetime transfers.

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

Grace transferred $800,000 into trust with the income to be paid annually to her spouse, Isaiah, for life and the remainder to Taylor. Calculate the amount of the taxable gifts from the transfers.

A serial gift strategy uses multiple gifts to maximize the value of the annual exclusion.

Madison was married at the time of her death and her gross estate consisted of $22 million in stock and bonds. Madison left all of her property to her spouse. What is the result?

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?

Adjusted taxable gifts are added to the taxable estate to accomplish which of the following objectives?

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

Which of the following is a true statement?