18.

Justin

and

Hailey

have been married for

28

years.

Justin

had a net worth

of $10,000,000 when he died in 2015. Which of the following scenarios

would incur the lowest overall (at

Justin

's death and

Hailey

's death) estate

taxes assu

ming the property transfers at equal value at the death of both

individuals and utilizing 2015 estate tax rates? Assume that portability is

not elected.

For full credit, show your calculations for each scenario

and justify your answer.

a.

Justin

's will dire

cts the transfer of $3,000,000 to his two

children and the remainder of his assets to his wife,

Hailey

.

b.

Justin

's will directs that all of his property is transferred

to

Hailey

.

c.

At

Justin

's death, specific bequests totaling $1,000,000

are transferred per th

e direction of the will to individuals

other than

Hailey

. The remainder of the assets are

transferred to a trust with the income payable to

Hailey

for her life and the remainder interest payable to the

children at

Hailey

's death.

Justin

's executor electe

d to

treat this as a QTIP trust.

d.

In his will,

Justin

funds a trust with $5,430,000 for the

benefit of his two children.

Hailey

will receive an annual

income distribution from the trust. All other assets will

transfer to

Hailey