Layne, in addition to the information you have provided, the firm was able to reach out to LaTonya and she has given specific information regarding her family. Latonya is currently married to Jean Paul and they have two children, however she has a daughter, Tracy, from a previous relationship. Additionally, at this point her gross estate's fair market value is approximately $6,800,000. More to the point, she has not made any lifetime transfers. Based on the data received, an ABC Trust Arrangement could provide for her husband and their two children, as well as for Tracy, while fully utilizing the marital deduction, estate tax credits, and other planning tools.
Since Latonya gross estate ($6,800,000) exceeds the "applicable estate credit equivalency amount of $5,450,000 (2016), the …show more content…
First of all, by Latonya creating a bypass trust (B Trust) equal to the estate tax credit equivalency amount, there is no estate tax liability at the time of Latonya's death and, if Jean Paul is not the trustee, this property will not be included in Jean Paul's gross estate. Consequently, Jean Paul will receive income for health, education, maintenance, and support while potentially avoiding taxes at his death. Furthermore, "the surviving spouse can be given a right to demand the greater of (1) $5,000 or (2) five percent of the trust corpus on an annual basis (Dalton & Langdon, 2016, p. 419). Additionally, their children can be designated as the remainder beneficiaries. Secondly, the remaining portion of LaTonya's gross estate ($1,350,000) can be divided between the A Trust and the C Trust. The A Trust, known as the
Since Latonya gross estate ($6,800,000) exceeds the "applicable estate credit equivalency amount of $5,450,000 (2016), the …show more content…
First of all, by Latonya creating a bypass trust (B Trust) equal to the estate tax credit equivalency amount, there is no estate tax liability at the time of Latonya's death and, if Jean Paul is not the trustee, this property will not be included in Jean Paul's gross estate. Consequently, Jean Paul will receive income for health, education, maintenance, and support while potentially avoiding taxes at his death. Furthermore, "the surviving spouse can be given a right to demand the greater of (1) $5,000 or (2) five percent of the trust corpus on an annual basis (Dalton & Langdon, 2016, p. 419). Additionally, their children can be designated as the remainder beneficiaries. Secondly, the remaining portion of LaTonya's gross estate ($1,350,000) can be divided between the A Trust and the C Trust. The A Trust, known as the