Table of Contents

Course Learning Objectives. 5

Description / Introduction. 5

Part 1 - Estates, Estate Taxes and Estate Planning Tools. 13

Estate Tax Defined. 13

Internal Revenue Service (IRS) 15

Intestacy. 15

Probate Court 15

Trustee. 15

Executor / Executrix. 16

Family Responsibilities. 16

Tools and Techniques for Estate Planning. 17

The Probate Process. 17

Disposing of Property using a Will 18

Disposing of Property without a Will 18

Non-Probate Transfers. 18

Joint Tenancy with Right of Survivorship. 19

Tenancy in Common. 19

Retirement Accounts. 19

Payable on Death Accounts (POD) 20

Life Insurance of a Decedent 20

Gifts Completed. 20

Transfers Executed by Means of a Trust 21

Trusts. 21

Trusts Defined. 21

Reasons for Using a Trust 21

Living vs. Testamentary Trusts. 22

Building Blocks of a Trust 23

Trusts - Revocable. 23

Trusts - Living. 23

Reversion Defined. 24

Living Trust Advantages. 24

Living Trust Disadvantages. 24

Pour-Over Will 24

Trusts - Irrevocable. 25

Trusts - Testamentary. 25

The Taxation of Trusts. 25

Grantor Trusts. 26

Grantor Retained Income Trusts. 27

Using Revocable Trusts. 27

Estates Compared to Living Trusts. 28

Using Irrevocable Trusts. 29

2018 Trust Income Tax Rates. 29

Capital Gains Treatment in Trusts. 29

Deduction of Estate Planning Expenses. 29

Deduction of Expenses. 30

Gift Tax with Respect to Trusts. 30

Estate Tax with Respect to Trusts. 30

Unlimited Marital Deduction. 31

Marital Deduction Trust 31

Qualified Terminable Interest Property (QTIP) Trust 32

“A-B” Trusts. 32

“A-B-C” (QTIP) Trust 34

Tax Basis. 34

Alternative Valuation. 35

Revocable Living Trust Clauses. 35

Identification Clause. 35

Trustee Clause. 35

Property Transfer Clause. 36

Revocation and Amendment Clause. 36

Income and Principle Clause. 36

Recital Clause. 36

Trustee Requirements. 36

Advantages of Hiring Corporate Trustees. 37

Advantages of Hiring Individual Trustees. 37

Trust Termination Clause. 37

Life Insurance Trust 38

Annual gift tax exclusion. 38

Unlimited Donees. 38

Gifts Exceeding $15,000. 38

Lifetime Exclusion for an Estate. 39

Unlimited marital deduction. 39

Gift Splitting. 39

Consent to Gift Split Applies to All Gifts. 40

IRC Reference. 41

5-year deferral and 10-year installment payment 42

Installment sale to family members. 42

Self-canceling installment notes. 42

Private annuities. 43

Crummey Trusts. 43

Charitable Remainder Trusts. 44

Minor Trusts. 44

Family Limited Partnerships. 44

Grantor Retained Annuity Trust 45

Qualified Personal Residence Trusts (QPRTs) 45

Grantor Retained Annuity Trusts (GRATs) 45

Grantor Retained Unitrusts (GRUTs) 46

Past and Present Exemptions and Estate Tax Rates. 46

Estate Planning Goals. 46

Estate Plan Outcomes. 47

Types of Estate Taxes. 47

Part 1 - Review Questions. 48

Part 2 - Estate Tax Calculation. 50

The Gross Estate. 50

Liabilities of the Decedent 51

Administration Expenses. 51

Dower, Curtesy, or Statutory Share of the Living Spouse. 53

Power of Appointment 54

Joint Tenants with Right to Survivorship. 54

Transferred property in which the decedent retained an interest 55

Government Obligations. 56

Life Insurance Proceeds. 56

Annuities and Survivor Benefits. 57

Medical Insurance Expenses. 58

Medical Insurance Reimbursements. 58

Gifts within 3 Years of Death. 58

IRC Reference. 59

Example. 60

Gifts of Life Insurance. 60

“Inter Vivos” Transfers. 61

Community Property. 61

IRC Reference. 62

Qualified Terminable Interest Property (QTIP) 63

IRC Reference. 64

Part 2 - Review Questions. 65

Part 3 - Valuing the Gross Estate. 67

Deductions for the Gross Estate. 70

Expenses. 70

IRC Reference. 71

IRC Reference. 72

Charitable Contributions. 73

Marital Transfers. 74

State Death Tax Deduction. 76

Gross Estate Credits. 76

Applicable credit amount (ACA). 77

Portability of unused applicable exclusion amount 77

Portability provisions. 77

IRC Reference. 79

Irrevocable Election of Portability. 80

Individuals that can Make a Portability Election for an Estate. 80

Portability Examples. 81

Portability Provisions to the Surviving Spouse's Estate. 81

IRC Reference. 83

Portability Provisions when Surviving Spouse is Not a US Citizen. 85

IRC Reference. 86

Examine returns of deceased spouses. 87

Estates of nonresidents who are not citizens DSUE amounts. 87

Federal estate tax paid on prior transfers. 87

Foreign Death Taxes. 88

Credit for gift taxes on pre-1977 gifts. 88

IRC Reference. 89

Estate Tax Payment and Return. 89

Reporting of value not required for certain property. 90

Return Due Dates. 91

IRC Reference. 93

Alternate Valuation Method Recapture. 94

Assessment Period. 94

Basis reporting requirement 94

Portability election for unused applicable exclusion amount 94

IRC Reference. 96

Tax charged to property. 97

Estate taxation on nonresident aliens. 98

IRC Reference. 99

Generation Skipping Transfers. 100

Transfer Types. 100

Exemption Amount 101

How to compute generation skipping transfer tax. 101

Generation Skipping Terminations Tax (GSTT) 102

Generation Skipping Distribution Tax (GSDT) 102

Direct Skip Gift Tax (DSGT) 103

Direct Skip Estate Tax (DSET) 103

Filing the return and paying the GSTT. 103

Gifts and bequests from expatriates. 104

Tax Cuts and Jobs Act – Changes related to Estate, Gift, and Generation-Skipping Transfers Taxes 106

Modifications to Estate, Gift, and Generation-Skipping Transfers Taxes. 106

Part 3 - Review Questions. 116

Review Question Answers. 118

Part 1 - Review Questions Answers. 118

Part 2 - Review Questions Answers. 121

Part 3 - Review Questions Answers. 125

Glossary. 130

Index. 133

Final Examination. 135

CPASelfstudy.com Course Evaluation. 141