Question

True/False

1.The taxable estate is similar to the equity concept of a balance sheet. It reflects the FMV of all assets less the decedents liabilities and “estate loss from operations”

2. Exemption Portability was recently introduced in an effort to correct poor estate planning that often resulted from “sweetheart wills”. Effectively, in these cases, the first-to-die spouse’s Unified credit can be transferred to the surviving spouse.

3. For estate tax valuation propose, assets are always valued at fair market value on the date of death. 8. Retained life estate is a useful too; to remove an assets from the gross estate while retaining the ability use/enjoy the transferred property.

Answer 1

1) True: The taxable estate is similar to the equity concept of a balance sheet. It reflects the FMV of all assets less the decedents liabilities and "estate loss from operations" 2) True: Sweetheart will can lead to unexpected tax liability since it does not incorporate tax planning. Portability rule enables a couple, without any advance planning, to use each spouse's unified credit to protect the marital estate from gift and estate taxes, effectively mitigating the problem from sweetheart wills 3) True: For estate tax valuation propose, assets are always valued at fair market value on the date of death. The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts 8) False (i'm guessing use and enjoy here means that the owner does have power over its administration) In a retained life estate, the donor irrevocably deeds a personal residence or some other entity, but retains the right to live in it for a certain term, such as the life. At the end of the measuring term, all rights to the real estate are transferred to the other entity. You can also get a get a current tax deduction if other entity is a charity. As with all charitable contributions, the tax deduction for gifts involving appreciated property is limited to 30 percent of the donor's adjusted gross income However, just remember that if the decedent was able to retain some type of enjoyment of the asset or power over its administration, its value would probably have to be included in the estate.