Logan is aware that estate taxes may be due upon his death. What strategies could be implemented to deal with the payment of those taxes? (Hint - at least 3 strategies must be addressed for full credit.)
GIFTS TO CHILDREN in 2016 Logan made the following gifts to his children during 2016: Logan gave $150,000 of separate property to Duncan. Logan paid $58,000 to USC for Cassidy's film school tuition. Logan gave Cassidy a Land Rover valued at $68,500 to celebrate his success in film school to date. GIFTS TO GRANDCHILDREN in 2017 Logan made the following gifts to his grandchildren during 2017: Seeing how Logan's mom outlived her assets, Logan is afraid his grandchildren may have the same fate. To assist them with their retirement income, Logan decided to establish a trust for the grandchildren. The trust is an irrevocable trust and he funded it in the current year with $800,000. The trust will accumulate income until each grandchild reaches age 50. When a grandchild reaches age 50, he/she will begin receiving an annuity for their life. When all of the grandchildren die, if there is any remaining assets then the trustee may distribute those assets to a charitable organization of his choosing. Logan sent a check in the amount of $16,000 directly to Casa Montessori preschool to pay tuition for the grandkids. Logan also gave each grandchild $15,000. Assume Logan paid gift tax of $2,300,000 in 2016 for taxable gifts in the amount of $11,180,000 made in 2015. These were his first taxable gifts. LOGAN'S STATEMENT OF FINANCIAL POSITION (AFTER THE GIFT TO VERONICA) ASSETS Cash & Cash Equivalents Cash Total Cash / Cash Equiv. $820,000 $820,000 LIABILITIES AND NET WORTH Liabilities Primary Residence AMEX Black Total Current Liabilities $2,000,000 $325,000 $2,325,000 Invested Assets The Neptune Grand Investment Portfolio Qualified Plan Total Investments $25,000,000 $8,000,000 $4,230,000 $37,230,000 Net Worth $42.373,000 Personal Use Assets Primary Residence Vacation Property Auto 1 Yacht Total Personal Use $4,500,000 $1,350,000 $73,000 $725,000 $6,648,000 Total Assets $44,698,000 Total Liabilities and Net $44,698,000 GIFTS TO CHILDREN in 2016 Logan made the following gifts to his children during 2016: Logan gave $150,000 of separate property to Duncan. Logan paid $58,000 to USC for Cassidy's film school tuition. Logan gave Cassidy a Land Rover valued at $68,500 to celebrate his success in film school to date. GIFTS TO GRANDCHILDREN in 2017 Logan made the following gifts to his grandchildren during 2017: Seeing how Logan's mom outlived her assets, Logan is afraid his grandchildren may have the same fate. To assist them with their retirement income, Logan decided to establish a trust for the grandchildren. The trust is an irrevocable trust and he funded it in the current year with $800,000. The trust will accumulate income until each grandchild reaches age 50. When a grandchild reaches age 50, he/she will begin receiving an annuity for their life. When all of the grandchildren die, if there is any remaining assets then the trustee may distribute those assets to a charitable organization of his choosing. Logan sent a check in the amount of $16,000 directly to Casa Montessori preschool to pay tuition for the grandkids. Logan also gave each grandchild $15,000. Assume Logan paid gift tax of $2,300,000 in 2016 for taxable gifts in the amount of $11,180,000 made in 2015. These were his first taxable gifts. LOGAN'S STATEMENT OF FINANCIAL POSITION (AFTER THE GIFT TO VERONICA) ASSETS Cash & Cash Equivalents Cash Total Cash / Cash Equiv. $820,000 $820,000 LIABILITIES AND NET WORTH Liabilities Primary Residence AMEX Black Total Current Liabilities $2,000,000 $325,000 $2,325,000 Invested Assets The Neptune Grand Investment Portfolio Qualified Plan Total Investments $25,000,000 $8,000,000 $4,230,000 $37,230,000 Net Worth $42.373,000 Personal Use Assets Primary Residence Vacation Property Auto 1 Yacht Total Personal Use $4,500,000 $1,350,000 $73,000 $725,000 $6,648,000 Total Assets $44,698,000 Total Liabilities and Net $44,698,000
