Pele, who lives in a common law state, would like to make his brothers and sister part owners of the large farm holdings that he has acquired. Because the holdings operate best as a unit, he would like to keep the individual holdings together. His siblings have different needs, so he would like to give them variable amounts: 10% to Ramon, 25% to Felix, and 18% to Juanita. Given Pele's goals and situation, what is the most appropriate way for him to title the farm holdings for his siblings?
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Pele, who lives in a common law state, would like to make his brothers and sister part owners of the large farm holdings that he has acquired. Because the holdings operate best as a unit, he would like to keep the individual holdings together. His siblings have different needs, so he would like to give them variable amounts: 10% to Ramon, 25% to Felix, and 18% to Juanita.
Given Pele's goals and situation, what is the most appropriate way for him to title the farm holdings for his siblings?
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- Your client, who does not have a will and does not plan to write one, recently purchased a tract of farmland to include in the family farming operation. He wants the entire tract to pass upon his death to his son, who will continue the farming operation. He wants the remainder of his property to pass to his wife. You should advise him that, to accomplish his objectives, the most appropriate form of titling to use for the farmland tract is A) joint tenancy with right of survivorship with his son. B) tenancy in common with his son and wife. C) tenancy in common with his son. D) joint tenancy with right of survivorship with his son and wife.Lamar owns a whole life insurance policy in which he is the insured and his children are the primary beneficiaries. In five more years, the policy will be paid up. Lamar would like to minimize the transfer tax on this asset for both his and his wife's estates. He also would like to avoid any income taxation under the grantor trust rules. Which one of the following estate planning techniques would best achieve Lamar's goals? A) Assigning both the policy and income-producing assets to a funded irrevocable trust either immediately or five years from now; earnings from the trust assets could be used by the trustee to pay the premiums B) Waiting until the policy is paid up in five years and then transferring ownership of the policy to an unfunded irrevocable life insurance trust C) Immediately transferring ownership of the policy to a revocable life insurance trust and gifting the annual premiums to the trustee D) Immediately assigning the policy to an unfunded…Dave is terminally ill and does not expect to live much longer. Pondering the consequences of his estate, he decides how to allocate his property to his nephews. He makes a gift of appreciated property (i.e., fair market value exceeds adjusted basis) to George, and leaves appreciated property to Ian in his will. Each of the properties has the same fair market value. From an income tax perspective, which nephew is his favorite? Which nephew is his least favorite? Explain.
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- Bill is in the process of selling his house to Lisa. Which role best describes each party? Bill is the remainderman and Lisa is the grantee. Bill is the grantor and Lisa is the grantee. Bill is the grantee and Lisa is the grantor. Bill is the lessor and Lisa is the lessee.Your client, age 65, has a gross estate valued at $300,000. His wife, age 58, has a gross estate valued at $150,000 and is financially competent. His objectives are to: leave all property to his wife in as simple a manner as possible; allow his wife to determine the ultimate beneficiaries of all his property; and make maximum use of the unlimited marital deduction. Which one of the following transfers is most appropriate for achieving the client's objectives? A)An estate trust with his wife as beneficiary B)Life income to his wife from a trust funded with the exemption equivalent amount, with the remainder to his designated beneficiaries C)A combination qualified terminable interest property (QTIP) trust and family bypass trust with his wife as income beneficiary D)An outright bequest of the entire estate to his wifeKeith, 65, owns several rental tracts with a total fair market value of $100,000. He wants his son, Chris, to own the tracts as Chris's share of his estate. Keith is considering an annuity agreement whereby the tracts would be sold to Chris in return for Chris's promise to pay Keith an income for his life based upon Keith's original life expectancy. Upon Keith's death, Chris would own the rental tracts outright. What is one estate tax implication of this proposed private annuity for Keith's estate? A) There is no estate tax liability because the annuity payments expire upon Keith's death. B) The value of Keith's gross estate increases because the gross-up rule applies. C) The value of Keith's gross estate increases because the present value of past annuity payments is included. D) There is no estate tax liability because taxes are paid on the annuity during Keith's lifetime.