Question
Martin Becker, age 64, owns and manages a commercial printing shop in New England. Martin plans to retire this year and has recently accepted an
Martin Becker, age 64, owns and manages a commercial printing shop in New England. Martin plans to retire this year and has recently accepted an offer to sell his company for $1.8 million. Martin and his wife Regina, age 63, bought a second home in Florida last year, where they intend to spend their winters. The couple has two children, Dave, age 40, and Debbie, age 37, who are both married and currently employed. Dave has one son, age 14, and Debbie has two daughters under the age of 10.
Martin's will provides that $200,000 of his estate will be placed into a power of appointment trust for Regina, and Regina is the sole trustee. The remainder of his estate is to be placed into a bypass trust with income payable to Regina for her life as needed. Regina will have a right to invade the corpus for health, education, maintenance, and support, and at her death any remaining corpus will be distributed to their children per stirpes.
Regina has some separate assets she inherited from her father. The first is a rare coin collection that was worth $180,000 at her father's death eight years ago, which is currently valued at $235,000. She also inherited his stock portfolio worth $86,000 which is now valued at $108,000. Regina was the sole beneficiary of her father's whole life insurance policy for which she received a death benefit of $200,000. She deposited that money in a separate account then used it to buy a duplex with her neighbor near a ski resort. Regina contributed $180,000 toward the $300,000 purchase price, and they titled the property together as Tenants-in-Common. Regina's will provides for all of her estate to pass to Martin or, if he predeceases her, to their two children equally.
Martin created an irrevocable life insurance trust two years ago, and transferred a whole life policy with a face value of $1 million into the trust. Regina will receive the income for life, and their two children will receive the corpus equally at Regina's death.
Property Item | Owner | Value |
---|---|---|
Checking and savings account | Joint | $23,000 |
Money market account | Joint | $58,000 |
Mutual fund account | Joint | $269,000 |
Securities inherited by Regina | Regina | $108,000 |
Coin collection inherited by Regina | Regina | $235,000 |
Printing shop | Martin | $1,800,000 |
Vested profit sharing plan* | Martin | $300,000 |
Furniture and household goods | Joint | $85,000 |
Jewelry and clothes | Regina | $95,000 |
Automobiles | Martin | $50,000 |
Life insurance | Irrevocable trust | $1,000,000 |
New England home1 | Joint | $750,000 |
Florida home2 | Joint | $450,000 |
Automobiles | Regina | $55,000 |
Duplex3 | Regina | $240,000 |
Property Item | Owner | Value |
---|---|---|
* Regina is named as the designated beneficiary 1Mortgage liability is $200,000. 2Mortgage liability is $180,000. 3FMV of duplex is $400,000. |
Assume for this question that the Beckers live in a community property state. If Martin dies three years from today and the value of his assets does not change, what will the value of his gross estate be for federal estate tax purposes?
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