Acc 341b Week 6 Questions
1. For estate planning, the financial planning objectives are to minimize taxes and to provide assets to the ones we care for with as little conflict as possible. Discuss the Generation Skipping Transfer Tax and how it could be used in financial planning.
The Generation Skipping Transfer Tax imposes a tax on both outright gifts and transfers in trust to or for the benefit of unrelated persons who are more than 37.5 years younger than the donor or to related persons more than one generation younger than the donor, such as grandchildren. This is helpful in financial planning because it allows you to transfer your estate to someone two generations away from you, and have the ability to get around the taxes. This is because the excess must be in excess of the GST estate tax credit. This typically does not happen because the tax credit levels are so high though.
2. Differentiate between Gross Estate and Net Estate.
Your gross estate is the total dollar value of all property and assets in which an individual had an interest at the time of their death. The net estate is what is left in your estate after all final costs have been paid such as funeral expenses and administrative expenses.
3. Discuss the potential usefulness of life insurance in estate planning.
The usefulness of life insurance in estate planning is to make sure your loved ones are cared for. This is not really a tax opportunity, but is more directed towards a means of living, education expenses and other final expenses that may occur.
4. Identify some “property” and discuss whether or not it needs to go through probate (i.e. how something is titled).
First off, probate happens to those assets in your estate that are not in a will. These items then go towards paying back debt, then finally to your family. The property that is typically