ESTATE PLAN MEMO - (BUSI 354- ESTATE PLANNING)

MEMO

TO: BRAD JANTZ

FROM:

SUBJECT: REASONS FOR ABOVE ANALYSIS OF THE ESTATE SCENARIO

This memo is going to shade light on the conclusions made about the questions above on the Darrin and Kathi estate. They support the calculation as well as the thought-out reasoning to come up with the outcome depicted. I will start by giving the analysis of each scenario and question.

The yacht replaced the destroyed boat. This house was supposed to be James’ at the death of Darrin hence he gains the yacht in place of boat.
Value of vocational home will be $250000.same as the value when Kathi inherited as it has not been revalued again. This will also transfer to any other who takes it after. It must be valued at the initial amount.
Gross estate is the value of what the individual owns individually. Does not include jointly owned items hence the above scenario. The Estate Tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death. The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them. The total of these items is your "Gross Estate." The includible property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets.
The right of survivorship is implied here. It is clear, that if one of the two dies all his/her property will transfer to the partner. If Kathi dies, the community property that was assumed to be jointly owned transfers to the partner who is Darrin.
In this case the spouse died the same year of filing the returns. Legally, the filing is Married Filing Joint as it is the same year of filing. It may be assumed that she filed it while the partner was alive. By doing this the standard deductions are lower. On a joint return, you report your combined income and deduct your combined allowable expenses. You can file a joint return even if one of you had no income or deductions. If you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. Also, your standard deduction (if you do not itemize deductions) may be higher, and you may qualify for tax benefits that do not apply to other filing statuses.
A tax incurred when there is a transfer of property by gift or inheritance to a beneficiary who is more than 37.5 years younger than the donor. Generation-skipping transfer taxes serve the purpose of ensuring that taxes are paid when assets are placed in a trust, and the person receives amounts in excess of the generation-skipping estate tax credit. This may not apply but as Darrin stated in his will, all expenses incurred in transfer should be on the beneficiary. In this case, therefore Elizabeth would have to incur the transfer expenses due to GSTT.
A charitable remainder trust is a trust that provides for a specified distribution, at least annually, to at least one non-charitable income recipient for a period specified in the trust instrument, with the remainder interest paid to at least one charitable beneficiary.
In calculating probate estate, value owned as well as insurance and premium I factored. Value would be lower than gross estate.
The expense on administering the estate cannot be deducted. The law assumes that she is administering the estate on behalf of Darrin. Therefore, any of such expenses are treated as accruing to the individual and not administrator.

Tax return must be made as the alternate valuation date will make the valuation vary with market condition hence gains recorded must be factored in.

References

Jacobs, Deborah L. (2012-10-18). "IRS Raises Yearly Limit For Tax-Free Gifts". Forbes. Retrieved 2017-03-09.

"Estate and Gift Tax 2013". 2013-01-02. Retrieved 2017-03-09.

Revenue Procedure 2014-61, Section 3.33, Internal Revenue Service, U.S. Dep't of the Treasury.

"Estate Tax" irs.gov, Retrieved 2017-03-09

O'Sullivan, Arthur; Sheffrin, Steven M. (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. p. 358. ISBN 0-13-063085-3