Estate planning

Gift tax

intervivos transfers; transfers while alive

estate tax

testamentary transfers property ownership transfers at death

Generation skipping tax

property transferred to a second or younger generation

unified transfer tax system

not a tax on income

tax assess on the transfer of wealth during lifetime at death

tax assessed on the FMV of property transferred

an indivdual tax - no filing jointly

tax paid by giver of property not recipeint

Redistribution of wealth pro

wealth should not be concentrated in a few families

prevent the race of idle rich

paris hilton tax

Redistribution of wealth

taxes captial already subject to income tax, this double taxation

Gift tax rate

40%

Annual exclusion

donor may give $18,000 per year to unlimited number of donee free of gift tax and reporting

Life time exemption

in addition to annual exclusion, donor may give $13,610,000 during lifetime tax free

Gift Split

married couples can both use their annual exclusion and doubl the amount of tax-free gift to a donee to $36,000

Crummy power

allow the beneficiary the right to withdraw from trust within 30 days or allow to lapse

Transfers not subject to Gift Tax

transfers in normal course of business

qualified transfers for direct payment of educational tuition or medical care

transfers to political organizations

property settlement in divorce

transfers to spouse

transfers to charity

Included in Gross Estate

FMV of all assets owned at Date of Death

FMV implies highest and best use

life insurance policies, if he had incidents of ownership within 3 years of death

gift tax paid within 3 years of death

What is the stretch rules

new owner must take annual minimum distributions based upon their life expectancy