Estate Planning Individual Research Project
1. Hal made the following gifts this year-
• $270,000 to his daughter
• $150,000 to his son
• $35,000 to his grandson
• $15,000 to City University.
Suppose the tax rates for 2012 are in effect. Calculate Hal's taxable gifts. Show your work.
2. Hal's wife Miranda has agreed to split the gifts (above). Calculate the taxable gifts. Show your work.
3. Ten years ago, Tom as well as his wife, Gerry, purchased 100 shares of GE stock for $50,000, holding it as JTWROS. Tom paid for the stock completely from his savings account. Tom died last year when the stock was worth $90,000. How much will be comprised in Tom's estate? Show your work.
4. Ten years ago, Ron purchased 100 shares of JNJ stock for $50,000, titling it JTWROS with his brother, Dan. Ron paid $30,000 for the stock and Dan paid $20,000. Dan died last year when the stock was worth $100,000. How much will be comprised in Dan's estate? Show your work.
5. Andy, Bobby, and Charlie are cousins. They decided to form an investment club. Each contributed $5,000 and the club purchased IBM stock. Andy died last year. At the time of his death, the stock had doubled in value. How much will be comprised in his estate? Show your work.
6. Ten years ago, Alexandra created an irrevocable trust as well as funded it with $100,000. Alexandra died last year. Assuming she made no other taxable gifts, how much is in her gross estate? Show your work.
7. Two years ago, Jack created an irrevocable trust as well as transferred in a life insurance policy that had a death benefit of $1,100,000. The trust was named the owner and beneficiary. Jack died last year. Assuming he made no other taxable gifts, how much is in his gross estate? Show your work.
Jill and Phil Blackstone are a married couple who have come to you for financial as well as estate planning. Their primary goal is to minimize estate as well as gift taxes. Their children are married and doing well thus their main concern is to maintain their lifestyle regardless of which of them passes first. They love their Uncle Sam however would like to disinherit him if at all possible.
Jill and Phil own the following assets together: (You may presume that they do not live in a community property state.)
• Checking Account $110,000
• Savings Account $100,000
• Municipal Bonds $200,000
• Primary Residence $5,000,000
• Vacation Home $1,0940,000
Phil owns the following assets in his own name:
• IRA Account $1,750,000
• Mutual Fund Accounts $1,000,000
• 401(k) Account $1,000,000
• Little Red Corvette $110,000
Jill owns the following assets in her own name:
• Credit Union Account $200,000
• Stock Account $1,250,000
• 403(b) Account $1,500,000
• Lexus $120,000
Jill and Phil have a personal loan account (Joint) with a balance of $75,000. They evaluation that funeral expenses would run approximately $25,000 (each). They have a mortgage on their residence in the amount of $1,200,000.
Five years ago, Phil purchased a VUL policy with a Death Benefit of $3,500,000. Two years ago, Jill purchased a UL policy with a Death Benefit of $1,500,000. Each named their partner as the primary beneficiary.
8. What is the value of Phil's gross estate? Show how you have dried each asset and what you have included in his estate.
9. What is the value of Jill's gross estate? Show how you have treated each asset as well as what you have included in his estate.
10. In view of their combined estate values as well as knowing that one of their planning objectives is the reduction of estate taxes, what are certain estate planning techniques you might recommend to the Blackstones?