Estate Planning

FIN 4385-01 Case II Executive Summary For the by several weeks, BJSMC conducted a comprehensive nation plan providing a morphologic outline of our clients, Scott, veritablem opportunities and limitations subject to specific request. Our client provided us with the sideline scenarios 1). If Scott dies this year, predeceasing action, and his executor elected his date of finis as the valuation date, specify those pluss (and their set) that would be includible in Scotts tax income(a) solid ground for estate evaluate purposes.Also, please explain your reason for the inclusion or exclusion of each asset. 2). Based on Scotts current estate plan, indicate those assets and their value that would qualify for marital deduction. Explain your reasons for the qualification or non-qualification of each asset for the marital deduction. Based on factual information, hard-copy documentation, and professional experience, BJSMC established the following resolutions to scenario I The Catch all Provision of Internal Revenue Coded states the general rule that the flagrant estate includes the value of all attribute interests, real or personal, substantial or intangible. Under instalment 2033, the deceaseds estate includes some(prenominal) interest in real estate, cash or money equivalents, whether unplowed in a bank, savings or checking accountancy, certificates of deposit, money market funds, or a safe-deposit box. The gross estate also includes all stocks, bonds (including tax-exempt bonds), notes and mortg durations receiveed by the decedent.Therefore, the full values of the following assets are include in Scotts gross estate under IRC Sec. 2033 since he is the fillet of sole deliverer o Stock in XYZ Corporation (500 shares) o new(prenominal) listed common stock o Tax-free municipal bonds o nest egg accounts o Household and other tangible personal property parting 2033 may also apply to inclusion of life insurance. If a decedent owns a life insurance po lity on his or her own life at the date of death, the face amount of that policy essential be include in the gross estate pursuant to theatrical role 2042(2).This section establishes a standard regarding incident of ownership whereby the owner of a life policy is required to include the proceeds in the gross estate in the event that he or she possessed all incidents of ownership. In this case, it is specifically mentioned that Scott owns four life insurance policies on his own life. Therefore, the following items are include in Scotts gross estate under IRC Section 2040 o Ordinary life policy purchased at get along 23 o 20 payment life policy purchased at 34 Ordinary life policy purchased at age 37 o Term to 65 policy purchased at age 44 Under IRC Section 2039, the total value of the moolah-sharing plan and death benefit plan would be included in Scotts gross estate. o XYZ Corporation pension (noncontributory) death benefits o XYZ Corporation profit sharing (noncontributory ) death benefits A special rule was enacted to control the estate taxation of joint property with secure of survivorship held solely by hubby and wife as well as property held as tenants by the entirety.Section 2040(b) (1) pertains to the one-half inclusion rule for spouses. The rule is that one-half the value of much(prenominal) property, regardless of which spouse furnished all or part of the consideration, is included in the gross estate of the first spouse to die. Therefore, half the values of the following assets are included in Scotts gross estate o Residence purchased in 1987 o Vacation home o Checking account All property held in joint tenancy with right of survivorship by joint tenants other than a husband and wife alone is treated under a different rule.The property is included in a deceased joint tenants estate correspond to a percentage-of-contribution rule. Scott and Dan own the following property equally as tenants in common therefore, half the value of the list ed property will be included in Scotts gross estate o Undeveloped real estate The property that Sue solely owns in her name (Saving account & other personal property) will not be included in Scotts gross estate. Property and property interests that are includible under Section 2033 are those that are owned by the decedent.Scott doesnt have any rights of ownership to Sues property in her name. Based on factual information, hard-copy documentation, and professional experience, BJSMC established the following resolutions to scenario II Qualifying marital Deductions $246,000 death benefit o Included in Scotts gross estate $30,000 and $200,000 ordinary o Payable to Sue in a lump sum $377,000 of joint property o Right of survivorship $700,000 property passing o Passed to Sue outright Non Qualifying Marital Deductions & understanding $70,000/20-payment life insurance policy o Not payable to Sue