Table
of Contents
Course Learning Objectives. v
Description / Introduction. v
Part 1 - Estates, Estate Taxes and Estate Planning Tools. 1
Estate Tax Defined. 1
Estate
Planning. 1
Attorney. 1
Accountant 2
Insurance
Agents. 2
Financial
Planner 2
Administration. 2
Internal
Revenue Service (IRS) 2
Intestacy. 3
Probate
Court 3
Trustee. 3
Executor
/ Executrix. 3
Family
Responsibilities. 3
Tools and Techniques for Estate Planning. 4
The
Probate Process. 4
Disposing
of Property using a Will 5
Disposing
of Property without a Will 5
Non-Probate
Transfers. 6
Joint
Tenancy with Right of Survivorship. 6
Tenancy
in Common. 6
Retirement
Accounts. 6
Payable
on Death Accounts (POD) 6
Life
Insurance of a Decedent 7
Gifts
Completed. 7
Transfers
Executed by Means of a Trust 7
Trusts. 7
Trusts
Defined. 7
Reasons
for Using a Trust 8
Living
vs. Testamentary Trusts. 9
Building
Blocks of a Trust 9
Trusts
- Revocable. 9
Trusts
- Living. 9
Reversion
Defined. 9
Living
Trust Advantages. 10
Living
Trust Disadvantages. 10
Pour-Over
Will 10
Trusts
- Irrevocable. 10
Trusts
- Testamentary. 11
The Taxation of Trusts. 11
Grantor
Trusts. 11
Grantor
Retained Income Trusts. 12
Using
Revocable Trusts. 13
Estates
Compared to Living Trusts. 13
Using
Irrevocable Trusts. 14
2018
Trust Income Tax Rates. 14
Capital
Gains Treatment in Trusts. 14
Deduction
of Estate Planning Expenses. 14
Deduction
of Expenses. 15
Gift
Tax with Respect to Trusts. 15
Estate
Tax with Respect to Trusts. 15
Unlimited
Marital Deduction. 16
Marital
Deduction Trust 16
Qualified
Terminable Interest Property (QTIP) Trust 16
“A-B”
Trusts. 17
“A-B-C”
(QTIP) Trust 18
Tax
Basis. 19
Alternative
Valuation. 19
Revocable Living Trust Clauses. 19
Identification
Clause. 19
Trustee
Clause. 19
Property
Transfer Clause. 19
Revocation
and Amendment Clause. 20
Income
and Principle Clause. 20
Recital
Clause. 20
Trustee
Requirements. 20
Advantages
of Hiring Corporate Trustees. 20
Advantages
of Hiring Individual Trustees. 21
Trust
Termination Clause. 21
Life
Insurance Trust 21
Annual
gift tax exclusion. 21
Unlimited
Donees. 21
Gifts
Exceeding $15,000. 22
Lifetime
Exclusion for an Estate. 22
Unlimited
marital deduction. 22
Gift
Splitting. 23
Consent
to Gift Split Applies to All Gifts. 23
IRC
Reference. 24
5-year
deferral and 10-year installment payment 25
Installment
sale to family members. 25
Self-canceling
installment notes. 25
Private
annuities. 25
Crummey
Trusts. 26
Charitable
Remainder Trusts. 26
Minor
Trusts. 26
Family
Limited Partnerships. 27
Grantor
Retained Annuity Trust 27
Qualified
Personal Residence Trusts (QPRTs) 27
Grantor
Retained Annuity Trusts (GRATs) 28
Grantor
Retained Unitrusts (GRUTs) 28
Past and Present Exemptions and
Estate Tax Rates. 28
Estate Planning Goals. 28
Estate
Plan Outcomes. 29
Types
of Estate Taxes. 29
Part 1 Review Questions. 30
Part 2 - Estate Tax Calculation. 31
The
Gross Estate. 31
Liabilities
of the Decedent 32
Administration
Expenses. 32
Court decree. 32
Consent decree. 32
For
example. 33
Debts. 33
IRC
Reference. 33
Dower,
Curtesy, or Statutory Share of the Living Spouse. 33
Power
of Appointment 34
Joint
Tenants with Right to Survivorship. 34
Transferred
property in which the decedent retained an interest 35
Government
Obligations. 36
Life
Insurance Proceeds. 36
Annuities
and Survivor Benefits. 37
Medical
Insurance Expenses. 37
Medical
Insurance Reimbursements. 37
Gifts
within 3 Years of Death. 38
IRC
Reference. 38
IRC
Reference. 38
Example. 39
Gifts
of Life Insurance. 40
“Inter
Vivos” Transfers. 40
Community
Property. 40
IRC
Reference. 41
Qualified
Terminable Interest Property (QTIP) 42
IRC
Reference. 43
Part 2 Review Questions. 44
Part 3 - Valuing the Gross Estate. 46
Deductions
for the Gross Estate. 48
Expenses. 48
IRC
Reference. 50
IRC
Reference. 51
Charitable
Contributions. 51
Marital
Transfers. 52
State
Death Tax Deduction. 54
Gross Estate Credits. 55
Applicable
credit amount (ACA). 55
Portability
of unused applicable exclusion amount 55
Portability
provisions. 55
IRC
Reference. 57
Irrevocable
Election of Portability. 58
Individuals
that can Make a Portability Election for an Estate. 58
Portability
Examples. 59
Portability
Provisions to the Surviving Spouse's Estate. 59
IRC
Reference. 60
Portability
Provisions when Surviving Spouse is Not a US Citizen. 61
IRC
Reference. 63
Examine
returns of deceased spouses. 64
Estates
of nonresidents who are not citizens DSUE amounts. 64
Federal
estate tax paid on prior transfers. 64
Foreign
Death Taxes. 64
Credit
for gift taxes on pre-1977 gifts. 65
IRC
Reference. 65
Estate Tax Payment and Return. 66
Reporting
of value not required for certain property. 66
Return
Due Dates. 67
IRC
Reference. 69
Alternate
Valuation Method Recapture. 69
Assessment
Period. 70
Basis
reporting requirement 70
Portability
election for unused applicable exclusion amount 70
IRC
Reference. 71
Tax
charged to property. 72
Estate
taxation on nonresident aliens. 72
IRC
Reference. 74
Part 3 Review Questions. 76
Part 4 - Gift Taxes and Generation Skipping Taxes. 78
Gift Tax Defined. 78
Unified Transfer Tax System.. 79
Lifetime Exclusion for an Estate. 79
Why Gift Taxes are Required. 79
Timing of a Gift 80
Gifts to an Entity. 80
Crummey Trusts. 80
Gifts to Minors. 81
Outright gifts. 81
2018
Trust Tax Brackets and Rates on Ordinary Income. 82
Guardianship. 82
Custodial arrangements. 82
Present Interest of Gifts to a Minor. 82
Qualified State Tuition Programs. 83
Not all Gifts are Subject to Gift Tax. 83
Gift that do not exceed annual exclusion. 83
Gifts to a Spouse. 83
Charitable Gifts. 83
Transfers to charitable organizations not subject to
federal gift tax. 84
Political Contributions. 84
Qualified Tuition Payments. 84
Medical Costs. 84
Annual Exclusion Amount 84
Unlimited Donees. 84
Gifts Exceeding $15,000. 85
Present Interest vs. Future Interest 85
Gift Splitting. 86
Consent
to Gift Split Applies to All Gifts. 86
Gift
Splitting Requirements. 88
Community
Property States. 90
Gift Tax Return. 90
Gift Tax Return Due Date: 92
Valuation. 92
Real Estate. 93
Valuation
Understatement 94
Computing Gift Tax. 95
Generation Skipping Transfers. 96
Transfer
Types. 96
Exemption
Amount 96
How
to compute generation skipping transfer tax. 97
Generation
Skipping Terminations Tax (GSTT) 97
Generation
Skipping Distribution Tax (GSDT) 98
Direct
Skip Gift Tax (DSGT) 98
Direct
Skip Estate Tax (DSET) 98
Filing
the return and paying the GSTT. 98
Gifts and bequests from expatriates. 99
Tax Cuts and Jobs Act – Changes related to Estate, Gift,
and Generation-Skipping Transfers Taxes. 101
Modifications
to Estate, Gift, and Generation-Skipping Transfers Taxes. 101
I.
Other Provisions. 108
1.
Temporarily allow increased contributions to ABLE accounts, and allow
contributions to be eligible for saver’s credit 108
Part 4 Review Questions. 113
Review Questions Feedback. 115
Part 1 Review Questions Feedback. 115
Part 2 Review Questions Feedback. 118
Part 3 Review Questions Feedback. 121
Part 4 Review Questions Feedback. 125
Glossary. 128
Index. 131
Final
Examination. 134
CPASelfstudy.com
Course Evaluation. 142