Anil Is 80 And He Marries Sarah Who Is 30. He Gives All His Property To Sarah Three Weeks After They Are Married.

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1. Anil is 80 and he marries Sarah who is 30. He gives all his property to Sarah three weeks after they are married. Is the transfer subject to GSTT since Sarah is more than 37 ½ years younger than Anil? Explain your answers.

2. When is a charity deemed to have an interest in a trust for GSTT purposes?

3. What is the deceased ancestor exception for GSTT? Provide an example of how it works.

4. Bernard is 100 years old. His next door neighbor, Benny is 40. Bernard is dead and his Will gives everything to Benny. Bernard’s gross estate is $30,000,000. Will the transfer to Benny be subject to GSTT?

5. Dr. Tanaka has come to you about setting up investment accounts for his four adult children in 2019. He and his wife, Dr. Smith, are still happily married. He only intends to make gifts to these accounts for his children. He will give them no other money throughout the year. What is the maximum amount Dr. Tanaka could give to you in 2019 to fund each account for each child? What if Dr. Tanaka and Dr. Smith made the gift together, does that change your answer? Please explain thoroughly.

6. Mrs. Bean was a U.S. citizen living in Guatemala at her death. She owned property in Chile, California, Texas, and Australia at her death. Her assets exceeded $20 million. Mrs. Bean’s Will provided that one-half (½) of her Estate should be distributed to the University of the Incarnate Word and one-half (½) should be distributed to her estranged husband, Mr. Bean.

I. Please provide a list of all states and countries in which Mrs. Bean owned property that will be included in her gross estate for United States’ estate tax purposes.

II. Please calculate the estate tax that the Estate of Mrs. Bean will need to pay. Assume she made no taxable gifts during her lifetime. Explain how you arrive at your answer.

7. What is the difference between a limited (or special) power of appointment and a general power of appointment?

8. Caroline inherited $300,000 from her brother, John. She has a joint bank account with her husband. She asks you if she should place that money in a joint bank account. What is your advice?

9. On Instagram, Kylie posts “mi esposo” on Instagram picture of Travis. They are living together in Houston, Texas. They have a child together. Travis does not call her his “wife” in any language. Are they common law married? Why or why not?

10. Felicia had a gross estate of $65 million. Her administration expenses were $2 million. Under her Will, she gave her husband $30 million, and she gave $13 million to the Animal Defense League. She made $14 million in gifts to her nieces during her lifetime. What is the value of Felicia’s gross estate?

11. List 4 transfers not subject to gift tax. Explain why each one evades gift tax.

12. Explain skip persons for GSTT purposes, and how we determine if they are a skip person or not.

13. What is a 529 plan? How do they work? If you were a financial planner, how would you advise your client to use one for their children? What are the benefits?

14. Explain the difference between a Charitable Lead Unitrust (aka Charitable Lead Trust) and a Charitable Remainder Unitrust (aka Charitable Remainder Trust). Provide examples of each.

15. What is the difference between a Qualified Terminable Interest Property Trust (QTIP) and Qualified Domestic Trust (QDOT)? How are they used?

16. Fully explain the following types of life insurance: Universal Life, Variable Universal Life, Whole Life, and Second-to-Die Policies.

17. What are buy-sell agreements? Why are the beneficial to recommend to clients (assume you are not violating the unauthorized practice of law statutes).

18. What is the “net value” for marital deduction purposes when determining the value of the property transferred to the surviving spouse?

19. Katy and Martin live in El Paso. Katy died in 2019. She gave all her property to her spouse, Martin, under the terms of her Will. Martin is not a U.S. Citizen. Will the transfer to Martin qualify for the unlimited marital deduction? Why or why not?

20. Bruce died in 2019. He gave all his property to his spouse, Julie, under the terms of his Will. Julie is a U.S. Citizen. Assume all transfers qualified for the unlimited marital deduction. His taxable estate is $0. Julie is worth about $18 million (a combination of her own wealth and the assets she received from Bruce). What should Bruce’s executor do on his Form 706 to allow Julie to utilize Bruce’s unused exemption amount? Explain thoroughly.

Questions 21 and 22 are based on the following facts.

Layla was in a serious car accident in 2016 which left her in a coma until her death in 2019. In 2017, Layla’s agent under her Statutory Durable Power of Attorney, Fred, transferred ownership of her life insurance policy to himself. The policy was valued at $2 million.

At her death in 2019, Layla owned the following property:

A. A house in San Antonio valued at $6 million.

B. A vehicle valued at $45,000.

C. An investment account valued at $3 million.

D. A rental property on the beach valued a $1 million.

21. Which assets are included in Layla’s gross estate?

22. Did Fred have the power to transfer Layla’s life insurance policy to himself? Was that the right thing to do? Is Fred in trouble?

23. Isabelle established a joint bank account with Jenny. Isabelle contributed all the funds. At what point has a gift been made to Jenny?

24. What are the advantages of making a Will?

25. Please describe how you arrive at each of the following to determine the tax which will be owed at someone’s death for estate tax purposes: (a) gross estate; (b) adjusted gross estate; (c ) taxable estate; (d) tentative tax base; and (e) tentative tax. Give an explanation of what you do at each stage.

26. You’re going in for surgery. Should you bring your Medical Power of Attorney document with you? What is that, and why or why not?

27. What are some ways that we have learned to make gifts to minors without needing a guardianship of the minor’s estate?

28. What is a Crummey provision, and why are they important for gift tax purposes?

29. Explain the difference between non-probate and probate assets. Give examples.

30. What is something you learned from our guest speakers?

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