Hank is a single individual who possesses a life insurance policy worth $300,000 that will pay his two children a total of $800,000 upon his death. This year Hank transferred the policy and all incidents of ownership to an irrevocable trust that pays income annually to his two children for 15 years and then distributes the corpus to the children in equal shares. Assume that Hank has made only one prior taxable gift of $5 million in 2011.

a. Calculate the amount of gift tax due (if any) on the gift.

If Hank dies this year but after the date of the gift. At the time of his death, Hanks probate estate is $10 million and it is to be divided into equal shares between his two children.

b. Calculate the amount of cumulative taxable transfers for estate tax purposes.

EXHIBIT 25-1 Unified Transfer Tax Rates Tax Base equal to or over Not over Tentative tax plus of amount over 10,000 18% 10,000 20,000 1,800 20 10,000 3,800 22 20,000 40,000 20,000 8,200 24 40,000 60,000 40,000 13,000 26 60,000 60,000 80,000 18,200 28 80,000 80,000 100,000 100,000 23,800 30 100,000 150,000 150,000 250,000 150,000 38,800 32 250,000 250,000 500,000 70,800 34 500,000 750,000 155,800 37 500,000 750,000 248,300 39 750,000 1,000,000 1,000,000 1,000,000 345,800 40