Estate and Gift Tax

Gifts in Contemplation of Death
Applies to gift taxes made within 3 years, gifts of life insurance, applies to release of any power that would have caused estate inclusion under 2033 or 2038.

Retained Property Interest
- If the decedent transfers property during life and retains possession or enjoyment. Then the decedent has the property in the gross estate.

Retained Reversions

Powers to Alter, Terminate, or Revoke

Special Use Valuation
GR: value at the highest and best use.
○ Special use valuation aimed at protecting farms and small businesses where a significant percentage of the estate is attributable to use.
○ Meet the requirements means that you value the farm as its use as a farm and not as a commercial property.

Special Valuation - applies to lifetime gifts
-Transfer certain business interests to your family and you retain other interests.
-If you transfer common stock and you retain preferred stock. If it is not a qualified payment then your retained preferred stock is given a zero family.
- Member of family - linear descendants, does not include siblings or neices or nephews

Applies to lifetime gifts
-Transfers to members of family.
-When you retain either a life estate or a term interest and you give away a remainder interest to members of your family.
-In general, the retained interest is given an zero value

Exceptions:
□ GRAT, GRUT, QPRT
Qualified Personal Residence Trust

Specifically targets buy/sell agreements.
GR: when you put restrictsions on a sale, the restrictions apply only if:
□ Bonafide business arrangement
□ Not a device
□ Comparable to arms length arrangements
- Safe harbor if more than 50% is owned by the family

- If you have a lapse of voting rights and if your family controls more than 50% of the company then the gift is considered lapse.
-Targets a dad transfering limited interest of voting interest rights.

Yes

No consideration, not a completed gift.

Considered a completed gift.

if the divorce decree includes the separation agreement then it is not a gift. 2 years before or 2 years after the divorce decree.

Grantor retained annuity trust - pays a fixed amount every year.

Grantor Retained Unitrust

Qualified Personal Residence Trust
-use this technique with a personal residence.

GRAT, GRUT, QPRT

gifts to minors
-everything is a present interest as long as the property may be expended for the benefit of the minor until age of 21. At age 21 everything pays out.

Held that as long as beneficiary is given notice and a reasonable time to withdraw it is present interest gift. After that period passes then it is locked into the trust for a time.

Extended Crummy Powers to contingent beneficiaries.

Retaining the right control over who enjoys or possesses the property.

power to revoke, alter, or terminate. pulled into grantor's gross estate.

Retained Reversion.
-If the decedent makes a transfer in trust or otherwise and the enjoyment is only attained by surviving decedent and the decedent retains a reversionary interest.

applies to 2037 and the interest must be more than 5% at the time of death.

-create a trust and retain a reversion that is worth more than 5% of the value of the trust you must pay income tax on the value of the trust.

Catch All
-any property that decedent has an interest in at the moment of death is included in the estate.