CERTIFIED FINANCIAL PLANNER CERTIFICATION PROFESSIONAL EDUCATION PROGRAM Estate Planning. Module 7 Estate Liquidity & Postmortem Actions. Learning Objectives. 7–1 Analyze a situation to identify existing or potential estate cash requirements and/or sources of estate liquidity.
Estate Liquidity & Postmortem Actions
7–1 Analyze a situation to identify existing or potential estate cash requirements and/or sources of estate liquidity.
7–2 Identify the characteristics and purpose of a given premortem liquidity planning technique.
7–3 Analyze a situation to identify premortem planning techniques that could be used to meet estate liquidity needs.
7–4 Evaluate a situation to select a premortem planning technique that can be used to meet estate liquidity needs and that is consistent with a client’s stated objectives or situation.
7–5 Identify the characteristics and purpose of a given postmortem planning technique.
7–6 Analyze a situation to determine the eligibility of an estate or its beneficiaries to use a given postmortem planning technique.
7–7 Evaluate a situation to select the postmortem planning techniques that are available and advisable for an estate or its beneficiaries.
To avoid forced liquidation of estate assets and
further shrinkage of the estate, these cash needs
should be reduced in a manner consistent with
other client goals.
To avoid forced liquidation of estate assets and
further shrinkage of the estate, these cash
resources should be increased in a manner
consistent with other client goals.
Which of the following correctly explains why a beneficiary who received non-probate assets by will substitute may agree to the use of all, or part, of the assets to meet estate liquidity needs?
Which one of the following is not a way to improve the liquidity position of an estate?
Which one of the following is a postmortem action that the surviving spouse who is not the PR can take in a common law state without the mutual consent of any other party?
Which one of the following is a required characteristic of a qualified disclaimer?
Carol owns 80% of IGU Corporation (one-half of the value of the stock is attributable to real estate owned by IGU). Currently, the value of Carol’s stock in IGU is 64% of her projected adjusted gross estate. Carol is examining the implications of transferring three-quarters of her IGU shares to her children from her current marriage. Her will leaves specified property valued at 10% of her estate to her husband and the remainder of her estate to her children from her former marriage.
Which one of the following postmortem elections would not be adversely affected due to the proposed transfer of the IGU shares from Carol to her children from her current marriage?
Bob died with a gross estate valued at $11.6 million in 2012. The majority of his estate consists of personal use assets and publicly traded stock, which has rapidly declined in value since his death.
Bob appointed his wife, Ann, as the PR for his estate. She also will receive half of his estate. His estate is the highest marginal estate tax bracket.
During the last year of his life, Bob incurred medical expenses of $40,000, all of which were reimbursed through health insurance. Two years before his death, he gifted $20,000 to his nephew and filed a gift tax return without Ann’s consent to split gifts. Bob and Ann were in the 28% marginal income tax bracket immediately prior to his death.
Which one of the following is a postmortem election that will minimize tax liability for Bob’s estate?
Which one of the following is a qualifying requirement for Section 2032A special use valuation of real property used in a business?
When Joe died in 2012, he was a widower with a gross estate of $5.2 million, which included a 50% partnership interest valued at $1.8 million. The partnership owned real estate valued at $1.4 million. His adjusted gross estate was $5,050,000. Joe’s will left $100,000 to a qualified charity and the balance of his estate, including the business interest, to his two nephews. They currently participate in the business and plan to hold the business interest indefinitely. Joe made no taxable gifts during his lifetime.
Given the facts stated above, which one of the following correctly states why Joe’s estate cannot qualify to use the installment method of paying the estate tax (Section 6166)?
Rodger, a U.S. citizen, has died in the current year. His gross estate is $6 million. His estate has a severe liquidity shortage. He was a widower and his will makes no charitable bequests. Rodger has operated this farm as a sole proprietor for the last six years.
The farm real estate has a date of death FMV of $1.3 million, and the farm related personal property has a FMV of $800,000. There are secured debts of $150,000 against the farm real estate, and $100,000 against the farm related personal property. Rodger had unsecured debts of $80,000 and administrative and funeral expenses of $70,000.
The farm is left to Rodger’s son in his will, and the son wishes to continue working on the farm. Rodger made no lifetime gifts.
Which one of the following postmortem elections can Rodger’s estate qualify for to help ease its liquidity shortage?
End of Slides