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Instead the surviving spouse will get a step up basis

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estate, but due to the estate tax marital deduction no estate tax will occur. Instead the surviving spouse will get a step-up basis for their share of the property. They will also get a step-up basis for the other half of the property. The entire value of the property owned at the time of the surviving spouse’s death will be included in his or her gross estate.
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6. a)None of the proceeds from the insurance policy will be included in Winnie’s gross estate. Ramon owns the policy in this example, not Winnie. She does not receive any benefit from the insurance policy either. The amount receivable by the insurance payout will go to Latrica. They are not payable to Winnie or the executor of Winnie’s estate, therefore IRC § 2042 nor IRC § 2042 will apply here. b) Winnie’s death will generate gift tax consequence to Ramon. He is the owner of the life insurance policy who has designated Latrica as the beneficiary. Under IRC § 2503, this will be treated as a gift and a lifetime transfer. 7. a) A QTIP trust can be established either during one’s lifetime or at the death of an individual. QTIP’s fall under IRC § 2056(b)(7). They are an elective provision only kicking into effect if the election is made by the executor of the decedent’s estate. The executor may be directed by the will of the decedent to make the QTIP election. b) When a QTIP election is put into effect, IRC § 2056 says that a marital deduction may be claimed for the full value of the QTIP property that is treated as being passed to the surviving spouse. IRC § 2056 also says that, “no part of [the] property [is] treated as passing to anyone other than the surviving spouse.” In order for property to qualify as QTIP, the following conditions must be met of Section 2056(b)(7) must be met: (1) the property must 'pass' from the decedent to the surviving spouse (2) the surviving spouse must be entitled to all the income from the property, which must be paid to the spouse at least annually for her lifetime (3) neither the surviving spouse nor any other person can have the power to appoint any part of the property to a person other than the surviving spouse during such spouse's lifetime (4) the personal representative must make an irrevocable election to treat the property as QTIP c) Under IRC § 2044, the entire value of the QTIP trust remaining at the time of the surviving spouse’s death will be included in the gross estate if a deferral on paying estate tax occurred at the death of the first spouse. The surviving spouse is limited in their ability to make gifts which can reduce tax due to the fact that QTIP assets cannot be appointed to individuals other than the surviving spouse. IRC § 2519 says the surviving spouse is treated as having made a gift if the spouse assigns part or all of her income interest in the QTIP. 8. The question posed here is not always true. There is no marital deduction available to the gross estate of a decedent when their surviving spouse is not a citizen of the United States.
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