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Ri CFP > Estate > Flashcards

Estate Flashcards

(96 cards)

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1
Q

Survivorship Annuities - Inclusion in gross estate

A

full value: if decedent had the right to a lump sum

PV of future pmts: if right to periodic pmts

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2
Q

3 Yr Rule: Included

A

gift taxes paid out of pocket

specific LI transfers

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3
Q

Transfers w/ Retained Life Interest

A

property transferred during decedents life is included if decended enjoyed a right to income or use the property during their lifetime

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4
Q

Exclusions from gross estate

A

LCL

life insurance owned by someone else (even if decedent is insured)

completed gifts

life estate for decedents own life only (interest in property terminates after death different than retained life estate).

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5
Q

prior transfer credit

A

death within 10 years

credit for double taxation

credit % based on proportion of 10 years. estate tax due is credit % x first decedent tax paid

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6
Q

what are powers of appointment

A

interest/provision usually found in trusts or estates

allows the holder to determine who gets to use the property subject to the power

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7
Q

general power of apointment

A

entitles holder to transfer property to anyone

invade corpus

can lapse if not exercised within a certain time period

pretty much the same as outright ownership

gift and estate taxed

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8
Q

special power of appointment

A

holder can transfer property to specific people or in specific situations

no tax implications

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9
Q

5 or 5 power

A

general power can also have a 5 or 5. holder of a 5 or 5 says is the greater of 5k or 5% of fund

that amount is included in donees estate. keeps larger portion out of estate

no gift tax imp

estate tax on greater of 5% or 5k

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10
Q

ascertainable standards

A

HEMS = not a general power

necessities of life

no tax implications

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11
Q

gift strategy: highly appreciated property

A

charity

donee in low bracket

or keep in estate for step up

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12
Q

gift strategy: likely to appreciate

A

remove from donor estate

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13
Q

gift strategy: income producing property

A

to donee in lower tax bracket

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14
Q

gift strategy: loss property

A

sell and gift proceeds

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15
Q

gift strategy: depreciation property

A

keep until depreciated

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16
Q

gift strategy: life insurance

A

great to gift

tax based on replacement value & benefit on face value

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17
Q

annual gift tax exclusion

A

18k

10k indexed

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18
Q

gift of future interest - annual exclusion

A

NO ANNUAL ExcCLUSOIN

i.e. transfers to an irrev trust (recipient does not have current enjoyment)

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19
Q

future interest exceptions

A

think 529s: you can get the 90k exclusion even though the kid doesn’t get to enjoy right away

2503c
crummey
gifts in tr on behalf of minors

THESE ONES DO GET THE EXCLUSION EVEN THOUGH THEY’RE TECHNICALLY FUTURE INTEREST

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20
Q

gifts to noncitizen spouses

A

super annual exclusion

185k

100k indexed

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21
Q

gift basis of appreciated property

A

owners original basis

+ gift tax paid that is attributable to the appreciation ONLY IF BY DONOR

find appreciation (fmv - basis)
X 40% = estate tax attributable to the appreciation portion
add to basis

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22
Q

basis of depreciated gifts

A

use diagram - wherever sale price lands

gain
_____________owner basis

0
_____________fmv

loss

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23
Q

gifts subject to debt

A

net value subject to gift tax (property - debt)

if debt exceeds original cost: donor realizes taxable gain on excess of debt over basis

donee new basis: original + gain realized

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24
Q

gift taxes 3 years

A

gift taxes paid within 3 years of death are added to gross estate

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25
when to file gift tax
gifts made over 18k future interest gifts of any amount gift splitting
26
gift splitting - over 36k
both need to file
27
gift splitting - under 36k
donative spouse files, non signs
28
gifts of property into JT or community
most: gift occurs when transfer of title executed jt accounts: upon withdrawal of funds ees: jt bond, gift when bond is redeemed
29
when is an immediate gift tax due
when you exceed the 13.61
30
exempt/fully deductible gifts
qualified pmt direct to dr or school american political parties qualified charities spouse
31
medicaid
2k in countable assets 5 year lookback for gifting certain amount of home equity state must be named as annuity bene
32
OBRA Trust
payback trust disabled under 65 stay eligible for medicaid by transferring assets to irrev obra tr state gets funds upon death
33
Per Capita
equal shares to each party specified
34
Per Stirpes
equal share to first row of benes one bene dead: their decendents get equal split of that single benes shares
35
Simple Trust
conduit income MUST BE distributed income taxed to bene usually do not distribute corpus no charitable gifts
36
Complex Trust
taxed as separate entity on earned income complex trusts MUST be irrevocable, grantor no control income accumulate (taxed to trust) or distribute (taxed to bene) may make char gifts
37
revocable trust
grantor transfers property and reserves right to revoke power if they want not a tax play grantor trust for tax purposes
38
trust exemption
$300 personal exemption
39
Crummey Tr
for 30 days after contribution, person with crummey power can take out lesser of annual exemption 18k or contribution irrev tr with demand rights you get the annual exclusion 18k since crummey power has the right to current enjoyment (otherwise it would be classified as future)
40
inter-vivos trust
revocable living trust grantor trust rules probate alternative not a complete gift
41
testamentary trust
created from a will the trust does not go thru probate
42
B Trust
Bypass trust, nonmarital, credit shelter, unified shelter, family trust dead spouse controls. fill it with up to exemption amount. surviving spouse can get income hems & 5 or 5 (no more than this) bypasses 2nd spouse estate, @ death goes right to next benes
43
A Trust
Marital Trust power of appt trust, spousal trust second spouse controls and decides who next benes are right to invade corpus included in gross estate of decedent (but not taxed), and ultimately in surviving spouse
44
C Trust
QTIP first to die controls current income trust marital deduction and stream of lifetime income use when there are children involved LAME lifetime annaul mandatory exclusively for spouse!!
45
estate trust
marital tr no income stream holds non income producing assets
46
gifts to minors types
present interest ugma, utma, 529, 2503c future interest 2503b bad boy
47
ugma
ugma = ugly no real estate cash type assets may be included in custodian estate cannot be testamentary usually distrubted at 18
48
utma
can include RE distribute at 21 can be testamentary can be included in custodian estate
49
2503b
provides stream of income income is present interest 18k exclusion is a gift income taxable to recipient remainder interest is future interest
50
2503c
any property not spent passes to donee at 21 (or given the option to do that)
51
kiddie tax ages
18 and less than half support 19-23, less than half support and full time student
52
sprinkling provisions
direct income at discretion of trustee to benes
53
discretionary provision
trustee sees fit to distribute principal and income
54
support trust
income only for support/essential needs or education
55
rules against perpetuity
interest must vest no later than 21 years 9 months after youngest life at time of creation dies includes babies in the womb
56
Dynasty Trust
B trust fo multiple generations free of estate, gift and gstt txes life interest for as long as the state allows
57
CLAT/CLUT
charity leads income to charity first income or estate tax deduction priv foundation 5% 30% deduction
58
CRAT
no additions (crap! restrictions!) payments fixed any charity 10% (of initial cont) ending value income tax deduction based on pv of remainder not subject to gift tax corpus payout 5% per year 20 year term max
59
CRUT
additions allowed (inflation protection) payments variable (assessed annually) any charity 10% ending value income tax deduction based on pv of remainder not subject to gift tax corpus pay out 5% per year
60
Pooled Income
additions allowed specific charity variable pmts
61
Charitable Gift Annuity
no additions fixed lifetime income payable to specific charity gift - annuity deduction
62
NIMCRUT
non char bene gets lesser % of trust value or net income earned if the amount is less, excess is forfeited account accrues in the years when net income is less, then, yyou can take the makeup DEFER INCOME choose this if you dont want the income every year
63
Wealth Rep Trust
ILIT face value of policy can be equal to or less than value of property transferred to charity no incidents of ownership, therefore stays out of estate
64
CLT
upfront deduction for pv of income to charity no deductions for annual dist
65
charitable gift annuity
transfer cash or property to charity and org pays donor an annuity stream property transferred exceeds guaranteed value of annuity charitable contribution = excess amount excess amt contributed = char deduction
66
PIF
transfer property into common trust single public charity manages the assets no term of years. life prorated share of income from trust income tax deduction for present value of remainder interest gift tax deduction of pv fremainder interest
67
private foundation
wealthy person, family charitable purposes distribute min 5% each year excise taxes
68
DAF
fund held by community foundation donor may recommend recipies no qcds
69
charitable stock bailout
gifting closely held stock charity tenders stock for cash redemption no contract for a specific time deduction = gift amount stock redemption in future, business value drops 3mm
70
bargain sales charitable
sale must be allocated proportionally to the gift and sale parts basis must be proportional gain on sale part
71
incidents of ownership
LI proceeds/value included in gross estate of insured
72
LI in gross estate
proceeds paid to estate decedent had incidents of ownership at death policy gifted within 3 years
73
sold policy - amt in gross estate of insured
none. no 3 yr rule
74
i own policy on my spouse, i die - gross estate inclusion
replacement cost
75
my spouse insured and i gift to my daugher - gross estate inclusion
not included - no 3 year rule
76
gifting life insurance during life
interpolated terminal reserve + unearned premium = gift amount (replacement value) subtract annual exlcusion amt
77
taxable gift triggered by death
i purchase LI on my spouse and name my son primary bene. spouse dies. i give a gift of the db to my son (because i could've named myself bene) ILIT is better here
78
corporate recapitalization
reduce value of busines interest through stock recap controlling interest of voting common stock >> after recap: limited or no voting shares. all preferred or nonvoting shares (w/ div) future appreciation shifted to younger generation
79
terminal interest rule
cannot be included in marital deduction what is it - interest that terminates on contingency of an event ocurring exceptions: transfer w/ life estate, annual payout, general power of appt qtip qdot
80
QDOT
pass property to noncitizen spouse to qualify for marital deduction
81
Net gift
after you use up exemption donee pays gift tax gross estate includes gift taxes paid within 3 years calc: donee pays og gift tax amount/1.4 adjusted taxable gift = gift amount - annual exclusion - tax calc dead in 3 years: tax added back to estate and gift tax credit
82
reverse gift
wealthy spouse makes gift of low basis to less wealthy spouse with low life expectancy works if spouse lives more than 1 year
83
Installment sale
pv of remaining payments in estate secured property capital gain. dont use if subject to depreciation
84
scin
no value included in estate higher payout than installment gain is capital gain, shows up on income tax return higher premium for cancellation feature, more income tax while living
85
private annuity
no value included in estate property transferred for promise taxation to seller
86
grat/grut
irrev trust: grantor makes gifts of property and retains income interest owner must outlive term or asset is brought back into estate corpus distributed to remainder benes grut: valued annually BEST: APPRECIATING ASSETS
87
partnership/s corp
gift shares family receives conduit income not for service related biz (i.e. good if you have equipment and own capital. not a cpa/attorney)
88
FLP
gift interest to lp to reduce estate shift income to other family members capital, material income producing take advantage of valuation discounts gp can still control
89
gift leaseback
fully dep property not if kid is under 24 biz deduction lack of available money
90
qprt
end of term, residence out of estate owner must outlive value of gift is discounted use when 10+ life expectancy donor lives there 13.6 estate residence is large
91
grit
retain right to income
92
skip persons
2 gens younger. if one gen dead, everyone moves up one unrelated people : 37.5 years younger
93
exemptions and exclusions
18k annual exclusion for direct skip gifts 13.61mm lifetime exemption. SEPARATE FROM GIFT AND ESTATE
94
direct skip
gstt imposed at time of direct skips transferor is liable
95
taxable terminations
termination of nonskip person income interest that results in a skip person being the remainin benes gift of future interest tax paid by trust
96
taxable dist
dist out of trust

Ri CFP (18 decks)

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