Estate and Gift FAQ

Estate and Gift FAQ

What is “estate planning”?
In a sentence, estate planning is planning to conserve one’s wealth while alive, and to maximize the transfer of wealth at one’s at death. Estate planning is not just for...
What is the purpose of estate and gift taxation and how are the two interrelated?
Simply stated, the estate tax is a tax on your right to transfer property at your death. Gift tax, on the other hand, exists to limit avoidance of the estate...
Who is subject to estate and gift taxation?
For purposes of estate and gift tax the jurisdictional bases are citizenship or residence, and the location of the property. The estate tax reaches all property owned by a citizen...
What sorts of property and property transfers generally are included in the gross estate?
Sections 2033 through 2046 of the Internal Revenue Code set forth the types of property and property transfers that are included in the gross estate. Generally, these provisions can be...
How are employment benefits treated with regard to the gross estate?
Treatment of employment benefits depends upon the nature of the payments made. A voluntary payment made by an employer to a deceased employee’s surviving spouse or family is not taxed...
Are pre-death transfers included in the gross estate?
Yes, estate tax reaches pre-death transfers. The estate tax cannot reach property that was the subject of a completed gift during the decedent’s lifetime. Thus, to prevent easy avoidance of...
What types of joint interests are included in the gross estate?
Generally, co-tenancies with a right of survivorship are included in the gross estate of the first joint tenant to die. This includes joint tenancies, tenancies by the entirety, joint bank...
Is life insurance includible in a decedent’s gross estate?
Proceeds of life insurance policies on the decedent’s life are includible in the gross estate if the proceeds are: 1) payable to (or for the benefit of) the decedent’s estate,...
What types of transfers made during the life of the donor are subject to estate tax?
The estate tax reaches only gratuitous transfers. Thus, transfers made for full and adequate consideration in money or money’s worth are not taxed. In instances where only partial consideration is...
What is the effect of a disclaimer or renunciation of property for estate tax purposes?
A disclaimer is an unqualified refusal to accept a transfer of property. Although other individuals may acquire an interest in the property as a result of the disclaimer it is...
When can U.S. estate taxes be assessed against a foreign estate?
A deceased nonresident individual that is not a United States citizen is only subject to U.S. estate taxation with respect to his or her U.S. situated assets. These U.S. situated...
What are the estate tax consequences of a U.S. recipient receiving a gift or bequest from a foreign individual?
Traditionally, under United States taxing principles a transferor (party making a gift) making a gift or bequest is the one subject to transfer tax (gift or estate) and reporting obligations...
How are distributions from foreign trusts treated for income tax purposes?
A trust is essentially a device under which a settlor (person creating the trust) provides assets to trustees to hold and manage for the benefit of certain named beneficiary or...
What methods are used to determine whether a trust is foreign or domestic?
Generally, the IRS will not issue an advance ruling on whether or not a trust is foreign or domestic. Therefore, it is left up to the taxpayer and his or...
What are the tax and reporting considerations of a foreign grantor trust?
A grantor, for U.S. tax purposes, is any person that either creates a trust or directly or indirectly funds a trust. In order for a foreign trust to be treated...
What are the tax and reporting considerations of a foreign non-grantor trust with U.S. beneficiaries?
Basically, any trust not considered a grantor trust is by default a non-grantor trust and treated as its own taxpayer. For example, the result of a grantor dying is a...

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