Question

Which of the following is a true statement?

Multiple Choice

• None of the choices are true.

• Serial gifts are limited in scope because only $10,000 can be transferred each year tax-free to any specific donee.

• A bypass provision in the will of the deceased spouse is designed to use the applicable credit of the deceased spouse by transferring property to beneficiaries other than the surviving spouse.

• Serial gifts can move significant amounts of wealth only if employed by multiple donors.

• Leaving all property to the surviving spouse maximizes the marital deduction and therefore minimizes total transfer taxes on the estates of both spouses.

Answer 1

Correct True Statement is:

Leaving all property to the surviving spouse maximizes the marital deduction and therefore minimizes total transfer taxes on the estates of both spouses.

Explanation:

The US Federal Estate and Gift Tax Law allows the surviving spouse to claim an unlimited marital deduction which includes all the assets transferred by the deceased spouse at any given time, even after death. The marital deduction usually covers 100% of federal estate tax, so the surviving spouse doesn't need to pay taxes on the transfers.