Bret died and was survived by his wife, Anne, and two adult children. Bret's will provided for the maximum estate tax applicable exclusion amount for the year of death to be placed into a family
Bret died and was survived by his wife, Anne, and two adult children. Bret's will provided for the maximum estate tax applicable exclusion amount for the year of death to be placed into a family bypass trust, in which Anne and the children were named as income beneficiaries, with the children to receive equal shares of the trust assets upon Anne's death. The will provided that the remainder of Bret's estate was to be placed in a power of appointment trust. Bret did not make any lifetime taxable gifts.
Assume that no federal estate tax deductions other than the marital deduction were taken.
Which of the following are CORRECT statements about the federal estate tax implications of the estate planning techniques contained in Bret's will?
- Bret's taxable estate will be zero, but his tax base will be the maximum estate tax applicable exclusion amount.
- Anne's interest in the family bypass trust is considered to be a terminable interest; thus, assets placed in this trust will not be entitled to a marital deduction.
- Any assets remaining in the power of appointment trust at Anne's death will be included in Anne's gross estate.
- Bret's estate will pay more federal estate tax with his current plan than he would if he had established a qualified terminable interest property (QTIP) trust, and his executor had made the QTIP election.
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