Schwartz F03 T&E Outline

Schwartz F03 T&E Outline - 1 TRUSTS & ESTATES...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Revocable Trust Irrevocable Trust Will Joint Ownership Limited Partnership Estate Tax: $1 million exemption Pay Avoid , unless the creator dies while still retaining enjoyment. Pay If A & B are NOT married and A paid for 100% of the property, it is includable in his estate. If A didn’t pay anything, nothing is includable. When B dies, the property is includable in his estate. You pay a double tax. If A & B ARE married, ½ is includable in the first spouse’s estate no matter who paid for it. When the second spouse dies, now 100% is includable because he/she owns it in its entirety. Pay (because manager retains discretion to determine if income is invested or distributed); Avoid paying by giving manager no discretion but that would defeat the purpose. Gift Tax: $11,000 exemption if single; $22,000 if spouse consents. Takes effect at the date of creation . Can avoid gift tax if the settlor retains the right to get the money. Can avoid gift tax with a trust for minors and a zeroed-out GRAT (which isn’t much of a gift). Generation-Skipping Tax: $1 million exemption. Takes effect at the date of beneficial enjoyment. Pay Pay Income Tax Avoid unless settlor retains interest (i.e., beneficiary only has a life interest); normally superior to irrevocable. Avoid unless settlor retains interest in the property; Pay if trustee retains interest/has too much power, i.e., GRAT ; Deduction for charitable gifts ( CRATS ) in the year you create the trust. Probate No No Yes No Estate Tax Exclusion : $1 million Generation-Skipping Tax Exemption : $1 million Gift Tax Exclusion : $1 million Marital Deduction : It doesn’t totally avoid an estate tax. It postpones it to the wife’s estate. - Avoids a gift tax; - Can give it to spouse outright; - Can give it to spouse for life; - Can give it to spouse for life with a general power to give it to anyone else;
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 - Can give it to her in a QTIP Trust = The interest will terminate in the future, but the spouse is entitled to get her fixed income and no one can diminish her share; (Avoiding the) Gift Tax : - Annual Exclusion (an advantage to making living gifts over deathbed gifts) = You can give $11,000 per year to as many different people as you want without incurring tax liability. Together with your spouse, you can give $22,000 to as many people as you want without incurring tax liability. o It has to be a gift of a present interest , i.e., it can’t be “To A for life and then to B.” - If you exceed the $11,000 figure, you can also avoid the gift tax with an irrevocable trust for the benefit of a minor if the requirements are met: The trustee has to have discretion to expend income for the minor as he sees fit. When the minor reaches 21, the principal and any accumulated income must be paid to the minor. If the minor dies before reaching 21, it has to be payable to the minor’s estate, or to whom is appointed in his will. o
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/14/2008 for the course LAW 7441 taught by Professor Cunningham during the Fall '06 term at Yeshiva.

Page1 / 34

Schwartz F03 T&E Outline - 1 TRUSTS & ESTATES...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online