- What is the difference between a straight single life annuity and a survivorship annuity? Are they included in a decedent’s gross estate for estate tax purposes? (4 points)
22.Bill owns a life insurance policy on his own life with a death benefit of $2,000, 000. His niece, Nancy, is named as beneficiary. In August 2018, Bill learned he had terminal cancer. In September, Bill transferred ownership in the life insurance policy to his sister, Susan. Bill dies in October 2018. Will it be included in his gross estate for estate tax purposes? (Explain fully!) (Worth 4 points)
- Rose owns a house in Port Aransas. She signs a deed that transfers the house to her friend, Fred, for his life. According to the deed, when Fred dies, the house will revert back to Rose or, if she is dead, then to her estate. Rose dies before Fred. Will any of the value of the house be included in Rose’s gross estate for estate tax purposes? Why or why not? (Worth 4 points)
- In 2018, Duke makes a gift of $20,000 to his daughter, Dixie, and a gift of $30,000 to his Wife, Wendy. Duke makes no other gifts in 2018. Answer the following questions (worth 2 points each):
a. Has Duke made a taxable gift to Dixie? Why or why not?
b. Has Duke made a taxable gift to Wendy? Why or why not?
- Chris makes the following gifts in 2018?
$10,000 to his friend, Joe
$1,000,000 to his wife, Sally
$6,000,000 to St, Jude’s Children’s hospital, a qualified 501© (3) organization
20,000 to the University of the Incarnate Word, to pay for his niece’s tuition.
Will Chris owe gift tax for making any of these gifts? (Explain fully)
- Explain the difference an Inter Vivos Trust and a Testamentary Trust.
- John and Marry own a home worth $q00,000. They sell the house to their daughter, Jessica, for $50,000. What gift tax consequences, if any, will result from this transaction?
- When Barrett dies, he owns stock of ABC Company. The executer of Barrett’s estate is trying to determine the value of the stock for Barrett’s probate estate and gross estate. How should the executor calculate the value of the stock?
- Carl establishes a trust for his son, Shane, which will last for his lifetime. The trust agreement includes the following language:
At his death, Shane shall have the power and authority to appoint any remaining trust property to anyone except that he may not appoint such property to himself, his estate, his creditors, or the creditors of his estate.
Is this is a general power of appointment or a limited power of appointment, and explain?
- What is a lack of marketability discount in relation to a closely held business?
Sample Solution
