Hank is a single individual who possesses a life insurance policy worth $334,000
ID: 2479403 • Letter: H
Question
Hank is a single individual who possesses a life insurance policy worth $334,000 that will pay his two children a total of $970,000 upon his death. This year Hank transferred the policy and all incidents of ownership to an irrevocable trust that pays income annually to his two children for 15 years and then distributes the corpus to the children in equal shares.Reference the tax rate schedule in Exhibit 25-1 and the Unified Credit schedule in Exhibit 25-2 to answer this problem. (Enter your answers in dollars not in millions.) Calculate the amount of cumulative taxable transfers for estate tax purposes if Hank dies this year but after the date of the gift. At the time of his death, Hank’s probate estate is $9.6 million and it is to be divided in equal shares between his two children.
Explanation / Answer
Gift of life insurance policy $ 334,000
annual exclusions ($14,000 per donee) - 28,000(2013-2016)
Current taxable gifts $ 306,000
Adjusted taxable gifts $ 306,000
Taxable estate + 9,600,000
Cumulative taxable transfers $ 9,906,000
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