Module 5
The federal unified tax system consists of what two taxes?
Gift Tax and Estate Tax
Downside to liquidating a retirement account for liquidity purposes?
Income Tax due to the Estate for NON-ROTH accounts.
What's the purpose of the GST tax?
To account for transfers to individuals two or more generations removed from the transferor.
What is a ward?
An incapacitated person?
Brock's favorite shoe?
Nike Dunks
NINE
In order for life insurance to assist with liquidity issues of an estate, who must be the beneficiary of the policy?
The estate itself OR no beneficiary.
What is a skip person?
A skip person is a lineal descendant transferee who is two or more generations younger than the transferor
One reason people do not plan for incompetency?
They have never contemplated what would happen if they became incapacitated
They find it unpleasant to contemplate their own incapacity and death
Their belief in their own lasting health and immortality
They procrastinate
What color is Brock's car?
RED
Define Gross Estate
“The value at the time of death of all property, real or personal, tangible or intangible, wherever situated”
If the personal representative chooses the Alternative Valuation Date (AVD) Election - what value will they use?
Value of assets six month's after decedent's death.
Decedent purchases stock for $10k in 1980. At the time of their death in 2020, the stock was valued at $120k. The sole heir sold the stock in 2026 for $150k. What amount will they pay capital gain tax on?
$30k
POA - document voluntarily signed by principal.
Guardianship - court process, not voluntary.
Where does Brock's sister live?
Salt Lake
What is the Deceased Spousal Unused Exclusion (DSUE)?
For decedents dying after 2010, the unused portion of the estate tax applicable exclusion amount of the first spouse to die is portable to a surviving spouse
What is the Special Use Valuation of Family Farmland?
Permits an executor to value qualifying real property in a decedent’s estate on the basis of its actual use rather than its highest and best use
Land used as a family farm can be valued as farmland rather than its value if it were converted to commercial use
Who pays the income tax for a grantor trust?
Durable v. Nondurable POA
The word “durable” in the title of a durable power of attorney document means that the agent’s powers will continue to be in effect even after the principal becomes incapacitated
The nondurable power of attorney cannot be used in preplanning for incapacity because the authority of the attorney-in-fact ceases when the principal is no longer legally competent to personally perform the act involved
Brock's attorney ID is which of the following:
(A) 330629
(B) 333412
(C) 338901
(D) 299735
(A) 330629
What is the Minority Interest Discount?
Minority ownership in a closely held business
Premised upon owner’s inability to influence business policy, compel income distributions, or force business liquidation, merger, or sale
What is a non-exoneration clause in a Will?
A provision in a Will to the effect that the beneficiary who receives property burdened by a mortgage must accept the property subject to the mortgage
What is the Deceased Ancestor exception of GST tax?
This rule allows a transferee to move up their generation assignment if they are a descendant of a parent of the transferor and their parent is dead at the earliest time of the transfer became subject to either gift or estate tax
What is third party reliance?
Third party will not be held liable if acting in good faith with power of attorney/ agent.
Brock has a favorite Bingo number. What letter does it fall under?
I17