Tax🥲
Stephanie gave her daughter $18,000. Has she made a taxable gift? Does she need to file a tax return?
No. Under the annual exclusion, an individual can gift $18,000 to any number of people they want, completely tax free.
Grandpa dies intestate with $100k in the bank and is survived by 2 sons. The sons claim Grandpa has no debts and are prepared to split the property evenly. Do they need to probate? What questions do you need to ask?
Probably need to probate because the bank probably won't just give them the money.
Question to ask:
How sure are they that there are no debts?
**If no one complains and initiates probate, then how will anyone know?
Granny Moss has three kids: Justin, Taylor, and Stephanie. Justin had two kids; Taylor had 1 kid; Stephanie had 3 kids. Justin and Taylor have died. What do Granny Moss's grandkids get when she dies under per stirpes, modern per stirpes, and UPC?
Per Stirpes:
S gets 1/3
J and T's kid split 1/3 each
-J's kids get 1/6 each
-T's kid gets 1/3
Modern per stirpes:
Same as Per stirpes (because not all 3 kids are dead)
UPC:
S gets 1/3
J and T's kids get 2/3rds to split and make even
Evil Stepmother leaves behind 3 children: Snow White, cinderella, and Belle. During Evil Stepmother's life, she gave Snow White a $100k advancement. Evil Stepmother leaves behind $500k. How will her assets be divided?
1. Add all the money ($500k (what she leaves behind) + $100k (advancement))= $600k
2. Money should be divided evenly (everyone gets $200k)
3. Therefore, Snow White gets the $100k advancement + $100k; Cinderella gets $200k; Belle gets $200k
You supervise a will for a 103 year old client. She is extremely weak and doesn't think she has the strength to sign her full name on the will. What do you advise?
1. CAN allow her to put her initials, BUT suggest that she sign more things that way (such as checks, notes, etc)
2. Have someone sign on her behalf (need to explain her circumstances and make a video)
3. Tell her to TRY and write it out
4. If you're in a generation that allows typing, just type it
NEVER PHYSICALLY HELP A TESTATOR SIGN!
Paige gives her son $13,610,000. Has she made a taxable gift? Does she need to file a tax return? Will she need to pay anything?
Yes, she will have to file this gift to the IRS because it is over $18k. You don't have to pay taxes unless the amount is over $13,610,000.
Raven and Devon are married. Devon dies and has no kids or parents. Devon had $500k. Who gets the money?
Raven gets everything.
Granny Moss has three kids: Justin, Taylor, and Stephanie. Justin had two kids; Taylor had 1 kid; Stephanie had 3 kids. All 3 children have died. What do Granny Moss's grandkids get when she dies under per stirpes, modern per stirpes, and UPC?
Per stirpes:
Justin's kids split 1/3
Taylor's kid gets 1/3
Stephanie's kids split 1/3 each
Modern per stirpes:
All grandkids split evenly (1/6 each)
UPC:
All grandkids get 1/6
Gabriella dies without a will (intestate) but has three kids: Troy, Sharpay, and Chad. Gabriella gave Troy $100k advancement, but she only died with $50k. How will the assets be divided?
You can NEVER give money back!
Split the $50K between the two children (Sharpay and Chad) who didn't get the advancement ($25k each)
Martha May dies with $100,000. She doesn't have a spouse but leaves her two children (Grinch and Cindy Lou). Martha May leaves $75,000 to Grinch and $5,000 to Max, her friend. The rest is left to charity. Cindy Lou did not get anything. At a probate hearing, it is discovered that Grinch and Max signed the will as witnesses. Is this a problem?
Yes, witnesses need to be disinterested, because they may have an incentive to lie
Zariya gives her daughter $68k. Has she made a taxable gift? Does she need to file a tax return? Will she need to pay anything?
Yes, this is a taxable gift. The first $18K is not taxable (it's fine) but the rest is taxable. Therefore, $18k is not taxable, and $50K is taxable.
Miley and Jake are married with no kids. Miley dies with no will and her parents are still alive. She has $400k in assets. Who gets what?
Jake gets $300k + (3/4 x 100 of the rest)= $375k
The remaining $25k goes to the parents.
This is based on our chart.
Meredith and Derek have a child, Zola. The marriage doesn't work out and Meredith meets McSteamy. They get married and Zola visits Derek, her dad, every summer. Derek allows McSteamy to formally adopt Zola. Derek dies. Can Zola inherit from Derek?
Under Maryland law, Zola has a new family/father (McSteamy) and she can't inherit from Derek anymore.
Aggie Cromwell dies with no will, but leaves 3 people (Marty, Sophie, and Dylan). Aggie gave Marty a house worth $100k. Aggie leaves behind $500k. At the time of Aggie's death, the house was worth $300k. How will the assets be divided?
The house is valued at when it was given.
Mufasa's will was signed by Simba, Nala, scar, and Timon. The will leaves gifts to Simba and Nala. Is this a problem?
No, because you only need two disinterested witnesses
Tristen dies with $15 million in assets. Tristen leaves $2 million to the Animal fund when he dies. Tristen makes two gifts before death: $518,000 to Hansel and $518,000 to Gretel. Calculate the estate tax by determining how much Tristen controlled at death, the exemption amount applicable at Tristen's death, and deduct the exemption amount from the taxable estate.
The taxable estate:
$15 million (Tristen's assets) -$2 million (gift to Animal fund)= $13 million
$18k of each gift can count towards annual exclusion. Therefore, add the $1 million of taxable gifts to the tentative estate tax base.
$13 million (the taxable estate) + $1 million = $14 million.
$5,545,800- [$5,389,800 (taxes for $13.10)]= $156,000
Zack and Maddy are married. They have 2 kids and Zack has a son from his first marriage from a previous marriage. Maddy dies with $325k in assets. Who gets what?
The first $225k goes to Zack- this is automatic
$225k + (1/2 x 200)= $275k to Zack
The remaining $50k will go to the kids
Shrek and Fiona have a child, Donkey. They immediately give him up for adoption. Donkey is adopted by Dragon and Prince Charming. Donkey never had contact with his natural parents. Should Donkey be able to inherit?
UPC default rule is NO! You can't double dip, BUT there are exceptions:
1. adopted by the spouse of a natural parent
2. adopted by genetic relative of the parent
3. if you are adopted after the death of a natural parent
"I, Steve Clowney, leave $2 million to Paige, Stephanie, Tristen, and Zariya if they avenge my death by killing Foster." Is this a valid advancement?
No, you can't have illegal conditions.
Where must the signature be in a will and why?
Gabi dies with $13 million in assets. During her life, she gives the U of A School of Law a gift of $3 million. she also gives Paige $10k every year. In addition, she will leave $2 million to Red Cross. Gabi is unmarried, pays no state death taxes, and has a pro bono lawyer. Does Gabi's estate owe anything?
$13 + [3-2]= $14 million
$2 million deduction for charity
$13.61 of the $14 million is off the hook. The remainder must be paid taxes on.
The $10k every year is fine because gifts just need to be under $18k.
Justin had $350k. He has 2 kids with Juliet and they are married. Justin also has 2 other kids (with another woman). Who gets what?
$150k + (1/2 x 200) =$250k. $100k is split evenly between all kids. Each kid gets $25k.
Matilda is abandoned, and a local nun finds her and gives her to Miss Honey. Matilda is raised by Miss Honey for 20 years before Miss Honey dies in a tragic accident. Can Matilda inherit from Miss Honey?
No! Matilda is not legally adopted.
Which of these are okay wills?
1. "I leave my son $10 million, but he must be a member of the Catholic Church?"
2. "I leave my son $10 million but he must remain a good Catholic?"
3. I leave my son $10 million if he ever gets divorced from his wife."
1. "I leave my son $10 million, but he must be a member of the Catholic Church?"
-probably okay
2. "I leave my son $10 million but he must remain a good Catholic?"
-Not okay: What is a good Catholic?
3. I leave my son $10 million if he ever gets divorced from his wife."
-Not okay, dissolution of family members is not okay
1. testamentary capacity
2. Testamentary intent
3. Will formalities
-Required: signature, writing, and 2 witnesses or notarized