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33 Cards in this Set

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  • Back

What is a Disclaimer?

A postmortem technique to rectify present planning mistakes and legal drafting errors which allows a 9 month window of opportunity to redistribute a decedent's assets and influence tax consequences.

What Sec. Deals with disclaimers?

2518

What are disclaimers usually used for?

For the purpose of directing property to a specific recipient.

What is the DSUE(A)

Deceased Spousal Unused Exclusion (Amount) - after 2010, the surviving spouse of a Decedent dying can utilize any of the deceased spouse's ununused basic credit/exclusion amount. This is under the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (TRA 2010) and the American Taxpayer Relief Act of 2012 (ATRA 2012)

What is the difference between a release and a disclaimer?

A release involves the relinquishment of a power or interest in property that has previously been accepted.



A disclaimer requires that the disclaimer must not expressly have accepted the disclaimed property or any benefits of the property interest

If someone is going to disclaim property, how much time do they have to do it in?

Within 9 months.

What does Sec 2032A address

The personal representative can elect that a farm and certain closely held business property included in a decedent's gross Estate be valued for estate tax purposes at its current or special use value vs its highest and best use value.

What does Sec 6166 address

Personal Rep may elect to defer the payment of estate tax attributable to the inclusion of a closely held business in a decedent's estate. If the business is >= 35% of adjusted gross estate and estate qualifies, estate taxes may be payable over 14 years and 9 months. This allows the business to remain open and continue vs being sold to pay the taxes.

What does IRC Sec 303 address

An estate that holds stock can redeem a portion to pay funeral and admin expenses and death taxes without the redemption being treated as a dividend. This helps the estate reduce its tax liability by reducing its taxable income.

What is the Alternate Valuation Date election

Personal Representative can value assets as of DoD or 6 months later, whichever is lower, to avoid paying higher estate taxes.

What is QTIP Trust Property?

Property that is otherwise nondeductible gets placed into trust and if used by the surviving spouse does not get taxed in the estate of the surviving spouse.



Said differently, certain terminable property interests qualify for the marital deduction

What is the family allowance?

A small limited sum of money set aside for the support of the surviving spouse and the children while the estate is being administered. This property is not a part of the distributable estate and is exempt from estate taxes

What are elective share statutes

State laws that allow surviving spouses to receive a minimum percentage of their decedent spouse's estate. Surviving spouse can file an election with the probate court to go against the will to redistribute the estate and get a greater portion.

What is Form 706?


Form 1041?



How do you know which one to use?

The Federal Estate Tax Return



The Estate Federal Income Tax Return



The greater tax savings determines which one to use

On which tax forms can medical expenses be deducted?

Either the decedent's final tax return (Form 1040) or on the federal estate tax return form (Form 706)

The Executor's fee - how does the Executor handle it and how does the estate handle it?

Taxable income to the Executor unless the Executor received it as a bequest and the estate can deduct the fee paid as long as the fee was not waived by the Executor.

What are the 3 types of powers of attorney?



Which type is the most useful for retirement and estate planning purposes?

1. Durable power of attorney - Powers remain in effect throughout the principal's capacity


2. Special (limited) power of attorney - agent acts only with regard to one or more specific tasks


3. Springing power of attorney - becomes operative only after a specified event occurs e.g. mental incompetence or disappearance.



The durable power of attorney

List the advantages of Power of Attorney

1. Principal's Alter Ego


2. Privacy


3. Flexibility


4. Inexpensiveness


5. Simplicity


6. Acceptance over living will


7. Viability despite disability


8. Avoidance of incompetency proceedings


9. Estate Planning tool

Advance Medical Directives

Durable POAs for health care and living wills

Health Care Proxy

A document appointing someone to act on their behalf with respect to personal medically related decisions. Aka MedicL Power of Attorney.

How are medical PoAs and living wills different

PoAs provide direction in internal medical situations

What federal legislation to encourage individuals to think about health care choices?

The Patient Self-Determination Act (12/1991) which was part of The Omnibus Budget Reconciliation Act of 1990 - patients have to be told whether their states permit them to refuse life-prolonging treatment.

What is HIPAA?

Effective in 2003, Health Insurance Portability and Accountabilty Act of 1996

What is a PAD?

A Psychiatric Advance Directive

CPR Directives, DNR Directives

DNR Directive is a type of CPR directive

What is Five Wishes? What is covered?

A type of Advance Medical Directive


1. Choice of health care agent


2. Medical treatment desired or not wanted


3. Care and comfort wishes


4. Personal treatment


5. Wishes for loved ones to know - funeral/burial



Valid legal document once signed and witnessed. Revocable

Guardian vs Conservator

Guardian cares for people


Conservator cares for property

How to avoid judicial guardianship?

1. Durable PoA


2. Joint ownership of property


3. Advance Medical directives


4. Trusts



Because with these arrangements, someone is already in place to take care of the property and the people.

What is a standby trust

It is unfunded until the grantor becomes incapacitated at which time an attorney in fact funds the trust with the grantors assets for the trustee to manage

What is a Craven Trust

A supplemental trust to provide supplemental maintenance for a nongrantor beneficiary without triggering the beneficiary's loss of governmental assistance benefits.

Do divorcing spouses avoid federal gift taxation?

Yes- transfers are treated as being made for full and adequate consideration as long as the divorce occurs with a 3 year period that revolves around the timing of the property settlement agreement.

What are the two different Social Security survivor benefits

$255 lump sum to a surviving beneficiary


Benefits to the surviving beneficiary based off the deceased workers benefits

How to address estate planning concerns for nonmarital partners?

1. Joint Tenancy with Right of Survivorship


2. Gifting


3. Testamentary Bequests


4. Revocable Trusts that name the partner beneficiary and become revocable upon other partners death


5. Life Insurance - IF The domestic partner has an insurable interest in the partners life; otherwise, an ILIT wherenthentrust owns the policy and the partner is the beneficiary.


6. Retirement plans that name the partner as beneficiary


7. Grantor Retained Income Trust- where only the difference between the market value and value of the retained interest is taxable