irrevocable trust
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Henry's oldest son has few financial resources. Henry would like to contribute annually to a trust, with his son only receiving the trust income. The remainder of the trust would go to his grandchildren (his son's children) at his son's death. Henry wants his son to receive all the earnings from the trust with no restrictions. He realizes that his son will likely squander trust income he receives but wants to otherwise protect his son from his creditors. Which of the following trusts would you recommend that Henry establish for the benefit of his son?
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- Jane has a gross estate estimated at $12 million. Approximately 75% of her estate is attributable to the value of personal property and collectible items. Jane is married but has no children. Her husband does not have a large estate because he spends money freely and foolishly. Since Jane is much older than her husband, she would like for him to benefit from her wealth after her death without giving him control over the principal either while he is alive or at his death. Jane wants as little of her estate assets as possible to go toward payment of estate taxes. She currently has no will but has come to you for advice regarding provisions she should put in a will. Which provision, if placed in her will, would be best to increase the liquidity of her estate and accomplish her other goals? A) Establish a testamentary trust naming her husband as the income beneficiary and trustee B) Establish a power of appointment trust naming her husband as the income beneficiary and a…Clare, age 28, that are financially independent. Robert is married and has one child and Clare is going to get married. Both Robert and Clare are planning to have more children. Adam’s and Liz’s total estate compromises of: They also have the two following mortgages: Mortgage on residential property: £130,000 Buy To Let mortgage: £80,000 Answer the following questions: A) Could you please calculate what is going to be the Inheritance tax liability if Adam dies and transfers all his Estate to his childrenWould you sign this return if you were Tom and Teri’s Paid Tax Preparer? Why or why not? Your clients, Tom (age 48) and Teri (age 45) Trendy, have a son, Tim (age 27). Tim lives in Hawaii, where he studies the effects of various sunscreens on his ability to surf. Last year, Tim was out of money and wanted to move back home and live with Tom and Teri. To prevent this, Tom lent Tim $20,000 with the understanding that he would stay in Hawaii and not come home. Tom had Tim sign a formal note, including a stated interest rate and due date. Tom has a substantial portfolio of stocks and bonds and has generated a significant amount of capital gains in the current year. He concluded that Tim is a deadbeat and the $20,000 note is worthless. Consequently, Tom wants to his son’s bad debt on his and Teri’s current tax return and net it against his other capital gains and losses. Tom is adamant about this!
- Determine the taxable gift in each of the following unrelated scenarios:Abram is single and gives $35,000 to each one of his eight grandchildren.Jacob is married and gives $35,000 to each one of his eight grandchildren. He and his wife gift split.In January, Curt sells YTM stock (FMV = $30,000) to Martina for $20,000.David sells a $500,000 real estate property to Joe for $100,000.In the ordinary course of business, Joe sells a diamond ring valued at $30,000 for $15,000 to a customer named Donna.Determine the items exempt from gift tax that were paid by Yancey:College expenses for his son paid directly to the institutionTuition = $20,000Room and Board = $10,000Transfer to Throw Them All Out political party = $3,000College expenses for his daughter paid directly to herTuition = $35,000Room and Board = $10,000Medical expenses for his son = $20,000Medical expenses for his son’s friend Sergio = $5,000Determine the annual exclusion in each of the following unrelated…Several years ago, Georgia transferred $500,000 of real estate into an irrevocable trust for her son, Lee. The trustee was directed to retain income until Lee's 21st birthday and then pay him the corpus of the trust. Georgia retained the power to require the trustee to pay income to Lee at any time and the right to the assets if Lee predeceased her. What amount of the trust, if any, will be included in Georgia's estate if she dies this year when the value of the real estate in trust is $700,000? Amount to be included in Georgia's estate14. Françoise has just inherited $90,000. In the event of her own death, she would like to leave this money to ensure the financial security of her son Maxime He is 18 years old and recently entered college to study philosophy. Françoise is a self-employed landscaper and snow-removal contractor. She recently had to take out loans to upgrade her equipment. Françoise is not sure whether she should invest her inheritance in a segregated fund with Maxime as the beneficiary or build an equity portfolio with better returns. Her priority is to provide for her son's future. If she were to one day declare bankruptcy, would the two investments Françoise is considering be protected from creditors? Only the segregated fund would be protected. Only the equity portfolio would be protected. O Both investments would be protected. ONeither investment would be protected. Choose 1 option
- Cora, 79, has an estate that includes her personal residence valued at $120,000 and $18,000 in a bank account that is solely in her name. She would like to arrange her estate so that she maintains exclusive control of the assets during her lifetime, but at her death the assets will pass to her friend, Mabel, outside of probate. Based on Cora's goals and situation, which of the following are correct statements about will substitutes that she could use? She should put her bank account in tenancy in common with Mabel. She should title her personal residence in joint tenancy with her friend, Mabel. She should execute a will that names her friend, Mabel, as the legatee of the bank account and the devisee of the personal residence. She should place the bank funds in a payable on death (POD) account with Mabel as beneficiary. She should change the title on her personal residence to indicate a life estate reserved for her lifetime and a remainder to her friend, Mabel. A)IV and V…Upon Jena’s retirement, the couple plans to relocate their home close to the beach. For this purpose, they intend to buy a house near the beach and a rental property (to fund their retirement). They do not have the funds to make these purchases. Please explain to the couple the downsizing retirement strategy most appropriate to their circumstance.George has a gross estate valued at $1.8 million. His estate consists almost entirely of publicly held stock owned solely by him. He owes no debts. George's only living relative is a nephew whom he hasn't seen or heard from in 30 years. George has not executed a valid will. If George were to die in the current year without change in any of the related facts, which one of the following is a disadvantage of the probate process for George? A) It will not allow payment of a personal representative's fee to reduce his estate tax so that it can be covered by the allowable unified credit. B) It will not allow George's estate to be subject to court supervision regarding payment of claims and distribution. C) It will not allow George's estate to claim a marital deduction to reduce the taxable estate. D) It will not allow distribution of his estate without incurring considerable cost in attempting to locate his nephew.
- Just prior to a major medical procedure, Cody gives his son, Liam, stock in Robin Corporation (fair market value of $1,624,200 and basis of $2,273,880). At the time of the gift, Cody held some unused capital losses. The surgery is unsuccessful, and after Cody's death, Liam sells the stock for $2,501,268. Question Content Area a. What is the income tax result for Liam? $fill in the blank c46f48f55fc1018_1 Question Content Area b. What if the gift had not been made and the stock passed to Liam as a bequest from Cody?Jamal, who lives in a common law state, would like to place his new bride on the deed to a residence that is currently in his own name. His goals regarding this residence and the transfer are: He does not want the transfer to cause him to use any of his gift tax applicable credit amount. He wants to be able to use the annual exclusion for the transfer. He wants the survivor of himself and his wife to receive title to the deceased spouse's interest in the residence. He does not want his wife to be able to convey her interest in the residence without his consent. He does not want more than 50% of the fair market value of the house to be included in his gross estate if he is the first to die. On the death of the first spouse, he does not want the residence to be subject to a probate proceeding. What is the most appropriate way for Jamal to title the residence when he makes the transfer? A) Tenants by the entirety B) Tenants in common with equal interests C) Jamal as the…2.Colin is 35 years old and inherits an IRA from his mother, who dies prematurely at age 60. Which of the following statements is correct regarding his options for the inherited IRA? Colin does not have to take distributions until his mother would have been 70 years old. Colin can rollover the IRA into his own IRA. Colin can take out the entire distribution within ten years and avoid all penalties. Colin must take distributions over his single life expectancy.
