Montgomery has decided to engage in wealth planning and has listed the value of his assets below. The life insurance has a cash surrender value of $$126,000,$ and the proceeds are payable to Montgomery's estate. The Walen Trust is an irrevocable trust created by Montgomery's brother $10$ years ago and contains assets currently valued at $$800,000.$ The income from the trust is payable to Montgomery's faithful butler, Walen, for his life, and the remainder is payable to Montgomery or his estate. Walen is currently $37$ years old, and the $7520$ interest rate is currently $5\mathrm{.}4$ percent. Montgomery is unmarried and plans to leave all his assets to his surviving relatives. $($Refer to Exhibit $25-1,$ Exhibit $25-2$ and Exhibit $25-4.)$

Property Value Adjusted Basis

Auto $$23,000$ $$58,000$

Personal effects $78,000113,000$

Checking and savings accounts $256,000256,000$

Investments $2,515,000785,000$

Residence $1,415,000995,000$

Life insurance proceeds $1,015,00056,000$

Real estate investments $10,140,0002,815,000$

Walen Trust $800,00080,000$

Required:

$1.$Calculate the amount of the estate tax due $($if any$),$ assuming Montgomery dies this year and has never made any taxable gifts.

$2.$Calculate the amount of the estate tax due $($if any$),$ assuming Montgomery dies this year and made one taxable gift in $2006.$ The taxable gift was $$1$ million, and Montgomery used his $2006$ applicable credit to avoid paying any gift tax.

$3.$Calculate the amount of the estate tax due $($if any$),$ assuming Montgomery dies this year and made one taxable gift in $2006.$ The taxable gift was $$5$ million, and Montgomery used his $$1$ million $2006$ applicable exemption to reduce the gift tax in $2006.$ Montgomery plans to bequeath his investments to charity and leave his remaining assets to his surviving relatives. EXHIBIT $25-4$ Discount Factors for Estimating the Value of Remainders

$\backslash$table$[[\backslash$table$[[$Regulation $20\mathrm{.}2031-7($d$)(7)],[$Table S$.-$Based on Life Table $2000$CM Single Life Remainder Factors$],[$Applicable on or after May $1,2009[$Interest rate$]]]],[$Age