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What is an appropriate standard estate planning strategy for married couples to minimize estate taxes over two deaths if a revocable trust is in place

What is an appropriate standard estate planning strategy for married couples to minimize estate taxes over two deaths if a revocable trust is in place during life?

a. Bequeath the entire estate to a trust, giving the surviving spouse a general power of appointment.

b. Bequeath the applicable exclusion amount to a qualified terminable interest property trust (QTIP) and the balance outright to the surviving spouse.

c. Bequeath the applicable exclusion amount to a bypass trust to take advantage of the unified credit at the death of the first spouse.

d. Bequeath the applicable exclusion amount outright to the surviving spouse and the balance to the children.

Your client, Albert, is 68-years old. He is interested in establishing a trust with a value of $6,000,000 for his family. He is aware of the Generation Skipping Transfer Tax, and he has asked you for your advice as to which of the following would be considered a skip person. Which of the following is a skip person?

a.

Albert's son Patrick, who is age 17.

b.

Albert's grandson Connor, age 14, whose mother (Albert's daughter) died in an auto accident this year.

c.

Albert's mother Thelma.

d.

A trust that Albert had established 3 years ago for Albert's favorite employee, Sam, who has just turned 20.

QUESTION 26

Donny died on January 1, 2016 after a drunk driver hit his car. The property that he owned at the time of his death included the following:

Property

Basis

FMV

1/1/16

FMV

4/1/16

FMV

7/1/16

FMV

10/1/16

FMV

1/1/17

House

$200,000

$350,000

$354,393

$358,842

$363,346

$367,907

Boat

$40,000

$38,000

$37,527

$37,060

$36,599

$36,143

Annuity

$100,00

$300,000

$275,840

$251,193

$266,050

$200,401

Note Receivable

$40,000

$200,000

$190,918

$181,744

$172,479

$163,121

Personal Property

$100,000

$30,000

$29,627

$29,259

$28,894

$28,534

Car

$47,500

$25,000

$24,689

$24,381

$24,078

$23,778

Rental Property

$230,000

$400,000

$411,101

$422,510

$434,236

$446,288

Total

$757,500

$1,343,000

$1,324,095

$1,304,988

$1,285,682

$1,266,172

All property listed above was owned in sole ownership by Donny. The annuity is a joint and survivor annuity and will continue to pay his wife Jeanette for her lifetime. Donnys will leaves all probate assets to his son and daughter in equal shares. Donny also owned a life insurance policy on his life. His basis in the policy was $89,000 and the death benefit was $1,000,000. The beneficiary of the insurance policy was Donnys daughter, Cheryl. The family sued the drunk driver and received $500,000 for wrongful death payable to Jeanette and $200,000 for Donnys pain and suffering payable to Donnys estate. Donny made substantial gifts during his life. He paid gift tax of $98,000 in 2006 and $67,200 on April 15, 2014. Donnys funeral cost $15,000. The car was sold 4/1/16 for its fair market value on that date in order to pay for Donnys $16,000 hand-carved marble headstone. Donny had $250,000 of medical expenses from the accident, but all expenses were covered by his medical insurance. The note receivable was being paid monthly.

What is the value of Donny's gross estate assuming the date of death valuation is selected?

$2,609,889.

$2,610,200.

$2,639,558.

$3,208,200.

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