True/False Curveballs
True or False: A U.S. citizen can annually gift an unlimited amount to their non-U.S. citizen spouse without gift tax.
Which of the following is a principal reason for establishing a revocable living trust?
Reducing the grantor's gross estate.
Temporal discounts.
Probate avoidance.
Avoidance of the rule against perpetuities.
Probate avoidance.
What are incidences of ownership?
Elect Portability.
What is the postmortem technique an executor utilize to reduce the overall estate tax liability of both spouses' estates?
Insurance protects the company and its shareholder because the IRS can challenge the value of stock if provided for in a shareholders agreement (SHA).
What is a reason to use life insurance to fund business continuation agreements?
True or False: Private operating foundations usually receive their support from an individual or family.
True.
Drew decides to set up a trust for the benefit of his two sons, Brady and Carson. Drew makes an annual contribution to the trust in the amount of $38,000 in 2025 when the annual exclusion was $19,000 and gives each son the right to withdraw up to $19,000.
In the current year, when the total trust assets are $52,000, Brady decides to withdraw $19,000, but Carson does not withdraw anything.
What is the result of Carson's decision not to withdraw any of Drew's contribution to the trust?
Carson has made a taxable gift to Brady of $7,000.
This type of trust is commonly used to own a life insurance policy outside of your taxable estate, helping to reduce estate taxes and provide liquidity at death.
What is an ILIT (Irrevocable Life Insurance Trust)?
The marriage between the grantor-spouse and the beneficiary-spouse of a what trust may end in a divorce.
The IRS challenges what strategy utilizing the reciprocal trust doctrine.
What are the risks associated with a spousal lifetime access trust (SLAT)?
Federal estate and gift taxes are determined by the fair market value of the property transferred. A property that is unique purpose may use this valuation election.
What is a special use valuation?
True or False: If an individual sells property to a charity for less than the full fair market value of the property, the transaction is split into two parts, a sale element, and a charitable contribution element.
True.
A trust arrangement in which the grantor transfers property into a trust but does not retain any right of enjoyment over the property, such as the right to receive the income generated by the property.
What is a grantor trust?
Which of the following rights will not cause an insurance policy to be included in the gross estate of the owner/insured if retained within the three years prior to the death of the owner/insured assuming the policy was in an ILIT?
1. The right to surrender the policy, but only in case of terminal illness.
2. The right to change the name of a charitable beneficiary to another charitable beneficiary.
The right to change the name of a charitable beneficiary to another charitable beneficiary.
The ultimate beneficiary of a QTIP trust is selected by the:
1. grantor
2. trustee
3. beneficiary
Who is the the grantor of the QTIP trust?
If a decedent transferred the ownership of the policy to their business partner four years ago.
The death benefit of the life insurance policy would not be included in a decedent's gross estate.
True or False: The use of a spousal lifetime access trust (SLAT) is NOT beneficial to married grantors in that they may retain indirect access to the gifted assets that reside in the SLAT, which is accomplished by naming the grantor's spouse as the income beneficiary of the trust.
False.
At the end of the trust term, the house will not revert back to the grantor, and to stay, the grantor must pay market value rent.
What is a qualified personal residence trust (QPRT)?
Benefits received under a periodic settlement option are partially subject to income tax.
What is the income tax treatment of life insurance proceeds?
What is a bequest up to the applicable exemption equivalent amount to a bypass trust and the balance to the surviving spouse in a qualifying way?
An estate planning strategy for married couples to minimize taxes after the death of both spouses.
Ways to pay taxes for a surviving family member of small business owner.
Pay estate taxes under IRC Section 6166.
Use an IRC Section 303 stock redemption.
The credit for tax paid on prior transfers was repealed in 2005. At that time, the credit became a deduction.
False.
Having a trust protector provides flexibility and adaptability to the estate plan to meet future changes in law or circumstances.
What is a reason to utilize a trust protector in an estate plan?
What occurs when:
What is when a life insurance policy IS included in the decedent's gross estate?
Create a credit shelter trust (a.k.a., B trust) equal to the exemption equivalent (with a provision for no invasion of principal) with the balance going into a QTIP trust, each with an outside trustee.
What is a way to generate sufficient income, to be distributed at the discretion of a professional adviser or trustee, to live on after a spouse's death if the decedent does not want the surviving spouse to have unfettered access to the principal.
A stock redemption plan must have a corporation as a party to the contractual arrangement.
What is a buy-sell agreement?