1) David purchased an annuity from Fidelity Insurance Company.

a. What are the estate tax consequences if David is to receive the greater of $2,500 per month for his life or $300,000, and David dies after receiving payments totaling $400,000? What if David has only received $200,000?

b. What are the estate tax consequences if David is to receive $2,500 per month for his life and after his death his nephew, Ned, is to receive $2,500 per month for his life? David predeceases Ned.