Estate Planning

FIN 4385-01 Case II Executive Summary For the past some(prenominal) weeks, BJSMC conducted a comprehensive domain externalize providing a structural outline of our lymph nodes, Scott, estate opportunities and limitations subject to specific request. Our leaf node provided us with the hobby scenarios 1). If Scott dies this year, predeceasing work, and his executor elected his consider of devastation as the valuation date, aim those additions (and their encour hop ons) that would be includible in Scotts utter(a) estate for estate tax purposes.Also, delight explain your reason for the inclusion or exclusion of each asset. 2). Based on Scotts current estate blueprint, show up those assets and their cherishs that would qualify for marital deduction. pardon your reasons for the qualification or non-qualification of each asset for the marital deduction. Based on existent information, hard-copy documentation, and professional experience, BJSMC established the following res olutions to scenario I The Catch wholly Provision of Internal Revenue Coded states the universal receive that the stark(a) estate includes the value of all berth interests, real or personal, tangible or intangible. Under partition 2033, the decedents estate includes both interest in real estate, bills or funds equivalents, whether kept in a bank, savings or checking aim, certificates of deposit, money market funds, or a safety-deposit box. The gross estate also includes any(prenominal) burgeon forths, bonds (including tax-exempt bonds), notes and mortgages causeed by the decedent.Therefore, the broad(a) values of the following assets be include in Scotts gross estate nether IRC Sec. 2033 since he is the sole proprietor o Stock in XYZ fellowship (500 sh bes) o Other listed special K stock o Tax-free municipal bonds o Savings accounts o Household and another(prenominal) tangible personal proportion naval division 2033 may also apply to inclusion of aliveness ins urance. If a decedent owns a flavour historytime insurance insurance on his or her own life at the date of death, the face amount of that policy must be include in the gross estate pursuant to divide 2042(2).This section establishes a standard regarding disaster of ownership whereby the owner of a life policy is required to include the issuing in the gross estate in the event that he or she possess any incidents of ownership. In this case, it is specifically mentioned that Scott owns quaternion life insurance policies on his own life. Therefore, the following items are included in Scotts gross estate nether IRC Section 2040 o so-so(predicate) life policy purchased at age 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 make headway-sharing plan and death benefit plan would be included in Scotts gross estate. o XYZ Corporation bounty (noncontributory ) death benefits o XYZ Corporation profit sharing (noncontributory) death benefits A limited rule was enacted to control the estate gross of junction property with right of survivorship held alone by economize and wife as well as property held as tenants by the entirety.Section 2040(b) (1) pertains to the one-half inclusion rule for first mates. The rule is that one-half the value of such 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 articulate 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 check to a percentage-of-contribution rule. Scott and Dan own the following property e qually as tenants in common therefore, half the value of the listed property testament be included in Scotts gross estate o unexploited real estate The property that Sue solely owns in her name (Saving account &038 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 put on 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 run-of-the-mill 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 like a shot Non Qualifying Marital Deductions &038 Reason $70,000/20-payment life insurance policy o not payable to Sue