Estate Planning With Selected Issues 2023 - 20 CPE
Course Description & Study Guide
This exceptional course surveys wills, living trusts, gifts, marital property, and probate avoidance. Will and trust forms are explored along with living wills, du-rable powers of attorney, and nominations of conservator.
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Estate Planning With Selected Issues
Course Description & Study Guide
This exceptional course surveys wills, living trusts, gifts, marital property, and probate avoidance. Will and trust forms are explored along with living wills, du-rable powers of attorney, and nominations of conservator. Designed to eliminate estate problems and death taxes, the emphasis is on practical solutions that are cost-effective.
Completion Deadline & Exam: This course, including the examination, must be completed within one year of the date of purchase. In addition, unless otherwise indicated, no correct or incorrect feedback for any exam question will be provid-ed.
Course Level: Overview. This program is appropriate for professionals at all or-ganizational levels.
Field of Study: Taxes
Prerequisite: General understanding of federal income taxation.
Advanced Preparation: None
Learning Assignments & Objectives
As a result of studying each assignment, you should be able to meet the objec-tives listed below each assignment.
Chapter 1 Estate Planning
At the start of Chapter 1, participants should identify the following topics for study:
* Build, preserve, & distribute
* Legal documents
* Estate planning team
* Estate administration
* Transfers within probate
* Transfers outside probate
* Transfers using a trust
* Special planning tools
After reading Chapter 1, participants will be able to:
1. Identify basic estate planning elements recognizing the importance of well-drafted legal documents and specify the key team participants including their roles in the estate planning process.
2. Determine the major steps in the probate process, identify ways to make transfers outside the probate system including the use of a trust, specify estate tax techniques that save death taxes while retaining max-imum control, and identify estate-planning facts.
After studying the materials in this chapter, answer exam questions 1 to 6.
Chapter 2 Estate & Gift Taxes
At the start of Chapter 2, participants should identify the following topics for study:
* Taxable estate
* IRS valuation
* Estate tax return & payment
* Tax basis for estate assets
* Generation-skipping transfer tax
* Application of gift taxes and valuation
* Gift tax annual exclusion
* Gift tax marital and charitable deductions
* Gift tax advantages and disadvantages
* Shifting income & gain
After reading Chapter 2, participants will be able to:
1. Identify potential death taxes including federal estate tax as it ap-plies to various size estates, specify the principal taxes that impact death taxation, and determine the expiration of the death tax credit.
2. Determine what constitutes a taxable estate under §2501 specifying what assets are included in a gross estate using basic categories of property and transfers.
3. Specify estate deductions allowed under federal estate tax law stat-ing their tax advantages and disadvantages.
4. Determine the value of a decedent’s assets using permitted elec-tions, recognize the use of Form 706 to pay any estate tax due, and se-lect the tax basis of estate assets stating how common transactions af-fect property basis under §1014.
5. Recall the advantages of gift planning including estate reduction recognizing the impact of the GST, specify the steps to compute gift tax identifying the gift tax exclusion amount, and determine the value of gifts including those that are split.
6. Identify the various gift tax exclusions, specify the tax treatment of below-market loans, recall the gift tax marital deduction requirements, determine the tax consequences of giving various assets specifying fac-tors to consider when gifting, and recognize the use of Form 709 to compute and pay federal gift tax.
After studying the materials in this chapter, answer exam questions 7 to 26.
Chapter 3 Wills & Probate
At the start of Chapter 3, participants should identify the following topics for study:
* Provisions of wills
* Requirements of wills
* Executors and guardians
* Types of wills
* Title implications
* Changes to a will
* Advantages of a will
* Simple will
* Probate pros and cons
* Probate avoidance
After reading Chapter 3, participants will be able to:
1. Specify types of wills citing the functions a will can perform, identify types of bequests, determine the duties of executors and guardians, and recall ways to hold title and their tax ramifications.
2. Identify advantages of a properly drafted will, determine the distri-bution flow of simple wills, and specify the pros and cons of probate proceedings.
After studying the materials in this chapter, answer exam questions 27 to 32.
Chapter 4 Trusts
At the start of Chapter 4, participants should identify the following topics for study:
* Purpose of trusts
* Common elements of trusts
* Types of trusts
* Living trusts
* Income tax & trusts
* Gift tax & trusts
* Estate tax & trusts
* Identification, recital, & property transfer clauses
* Income and principal & revocation and amendment clauses
* Trustee & trust termination clauses
After reading Chapter 4, participants will be able to:
1. Identify the relationship of parties in a trust, reasons to establish a trust, and types of trusts specifying their estate planning function.
2. Specify recommended living trust provisions, identify the application of gift and income tax including the use of a grantor trust and an un-limited marital deduction, and determine what constitutes an “A-B” and “A-B-C” trust format.
After studying the materials in this chapter, answer exam questions 33 to 42.
Chapter 5 Entities & Title
At the start of Chapter 5, participants should identify the following topics for study:
* Individual ownership & sole proprietorships
* Trusts & co-tenancies
* Co-tenancy taxation, percentage interests, & partition
* Partnership taxation & recapitalization
* Family partnerships
* Limited liability companies
* Retirement plans
After reading Chapter 5, participants will be able to:
1. Identify tax and legal title formats naming differences among these entity formats by:
a. Specifying the advantages and disadvantages of holding property individually and through a sole proprietorship or a corporation stat-ing how to avoid associated title pitfalls;
b. Selecting primary groups of C corporations specifying the estate-planning problems associated with each; and
c. Recalling advantages that partnerships can have over corpora-tions.
2. Determine S corporation rules stating tax advantages and disad-vantages and also specify disadvantages and advantages of incorporat-ing a farm.
3. Identify title holding benefits of trusts, co-tenancy, partnerships, and limited liability companies and the tax characteristics of each.
4. Specify types of retirement plans used to provide lifetime benefits to a business owner and to employees, identify how title can be held on behalf of minors and the tax treatment of custodianships, and recall the tax treatment of a probate estate.
After studying the materials in this chapter, answer exam questions 43 to 50.
Chapter 6 Life Insurance, Annuities & Buy-sell Agreements
At the start of Chapter 6, participants should identify the following topics for study:
* Types of life insurance
* Life insurance trusts
* Deferred annuities
* Private annuities
* Buy-sell agreements
* Purchase price & terms
* Community property
* Professional corporations
* S corporations
* Sole shareholder planning
After reading Chapter 6, participants will be able to:
1. Specify persons in which rights are placed by life insurance and rea-sons to purchase life insurance.
2. Identify the tax treatment of life insurance proceeds by:
a. Determining the treatment of premiums for personally owned life insurance and related benefits and specifying exceptions to this treatment including the transfer for value rule;
b. Select variables that influence whether life insurance is taxable for federal estate tax purposes; and
c. Recalling the gift tax associated with the transfer of life insurance policies.
3. Specify the pros and cons of various types of life insurance policies to guide clients in choosing a suitable policy.
4. Identify reasons for establishing an irrevocable life insurance trust to achieve estate tax planning advantage, specify considerations in estab-lishing life insurance trusts, and determine the differences between de-ferred and private annuities.
5. Determine what constitutes an entity purchase agreement and a cross-purchase agreement recognizing tax and legal advantages.
After studying the materials in this chapter, answer exam questions 51 to 64.
Chapter 7 Special Business Issues
At the start of Chapter 7, participants should identify the following topics for study:
* Business valuation of tangible & intangible assets & goodwill
* Business valuation of qualified family-owned businesses
* Business valuation of land subject to a conservation easement
* Business valuation discounts
* Buy-sell agreements
* Death of spouse
* Stock redemptions
* Stock recapitalization
* Deferred compensation agreements
After reading Chapter 7, participants will be able to:
1. Identify reasons why a business interest must be valued in an estate that is subject to federal estate tax, specify factors used to determine
the net value of a business under the regulations, and recall the valua-tion factors in R.R. 59-60 specifying their impact.
2. Determine how tangible assets are normally valued identifying those assets whose valuation is based on values other than book value, and specify the steps in R.R. 68-609’s valuation formula for intangible as-sets specifying the effect such amount can have on the total value of a business.
3. Identify special business valuation issues including redemptions un-der §303 by:
a. Determining what constituted the now repealed qualified family-owned business estate tax deduction;
b. Recalling the terms of the election that allows clients to exclude from their taxable estate 40% of the value of land subject to a quali-fied conservation easement;
c. Determining the value of a minority stock interest and fractional interests in order to obtain applicable valuation discounts, and
d. Citing the §303 exception to the dividend treatment of redemp-tions stating qualifications.
4. Determine the tax consequences in leaving an estate to a surviving spouse, specify the elements of buy-sell agreements, stock redemp-tions, and stock recapitalizations in order to dispose of business inter-ests before death, and identify deferred compensation agreements rec-ognizing their estate planning impact.
After studying the materials in this chapter, answer exam questions 65 to 73.
Chapter 8 Estate Tax Freeze Rules
At the start of Chapter 8, participants should identify the following topics for study:
* Application of estate tax freeze rules
* Corporations, partnerships & exceptions
* Qualified payment exception to zero value rule
* Minimum valuation of a junior interest
* Capital contributions, redemptions, & recapitalizations
* Attribution rules
* Transfers of interests in trust
* Term interests & joint purchases
* Buy-sell agreements & options
* Lapsing rights & restrictions
After reading Chapter 8, participants will be able to:
1. Determine the benefits of an estate freeze and its ability to reduce the value of a business interest, identify transactions to which Chapter 14 rules apply and terminology used in the Chapter 14 valuation rule that applies to corporations and partnerships, and specify exceptions to §2701.
2. Identify the “zero value” rule under §2701 by:
a. Recalling the qualified payment exception and the consequence of being excepted;
b. Specifying variables that impact the application of §2701 stating how to avoid taxable events when valuing a distribution right;
c. Determining the transfer tax when a taxpayer fails to make a quali-fied payment on time identifying the appropriate election into or out of qualified payment treatment; and
d. Specifying a junior equity interest according to §2701 rules and determining the value of other rights held together with an extraor-dinary payment right.
3. Determine the application of §2701 provisions by:
a. Recalling the treatment of a capital contribution, a redemption, or a recapitalization under §2701;
b. Identifying when an individual is deemed the owner of an interest that is held indirectly through a corporation, partnership, trust, or other entity based on the §2701 attribution rules;
c. Specifying when transfer tax adjustments will be made to transfers or inclusions in the gross estate;
d. Identifying the split of an applicable retained interest allowing value to be given to a participating feature of a participating pre-ferred interest; and
e. Specifying the stepped computation under the subtraction method to determine an amount of a gift resulting from a transfer to which §2701 applies.
4. Recall the terms used in §2702 concerning transfers of interests in trust, identify the application of the zero value rule to a transfer of in-terest in trust, specify exceptions to §2702, determine the transfer of an interest in property when there are one or more term interests as a transfer of an interest in a trust, and specify the treatment of joint pur-chases.
5. Recognize the requirements and exceptions of §2703 to ensure property is valued appropriately, identify lapses as a transfer by gift or
as includible in the decedent’s gross estate under §2704, recall the key terminology of §2704 under the evaluation rules, specify the amount of the transfer stating which lapses or restrictions qualify as an applicable restriction.
After studying the materials in this chapter, answer exam questions 74 to 91.
Chapter 9 Elderly & Disabled Planning
At the start of Chapter 9, participants should identify the following topics for study:
* Managing the estate
* Medicaid & countable assets
* Medicaid & non-countable assets
* Medicaid & inaccessible assets
* Private insurance
* Healthcare decisions
* Supplemental security income
* Income & assets
* Disability benefits
After reading Chapter 9, participants will be able to:
1. Recall estate management techniques for the elderly and disabled by:
a. Identifying joint tenancy and the benefits and drawbacks of using such a method for asset management;
b. Specifying levels of conservatorship that can influence management and protection of an estate and/or personal care and disadvantages of this tool; and
c. Determining what constitutes a durable power recognizing advantages of establishing a revocable living trust as a way to man-age assets in an estate.
2. Cite the eldercare benefits of Medicare, Medicaid, and Supple-mental Security Income, identify disadvantages of the Medicaid pro-gram stating how to divide income into asset groups, and specify the dangers and benefits of gifting to family members, including how indi-viduals might use private insurance for catastrophic illness.
3. Identify tools that can allow patients to refuse treatment even when incompetent, determine Supplemental Security Income specifying how
it relates to elderly and disability planning, and specify the require-ments that must be met in order to receive disability benefits.
After studying the materials in this chapter, answer exam questions 92 to 101.
Chapter 10 Post-mortem Planning & Tax Return Requirements
At the start of Chapter 10, participants should identify the following top-ics for study:
* After death planning
* Federal returns
* Decedent’s estate tax
* Preparation of Form 706
* Estate income tax return
* Filing requirements of decedent’s final income tax return
* Included income
* Exemptions & deductions
* Filing the gift tax return
* Special applications & traps of the gift tax return
After reading Chapter 10, participants will be able to:
1. Determine post-mortem estate planning action in the face of funeral and admin