Question

1. Why might an Executor of a Will elect to use the alternative valuation date?

A The value of the estate is below the estate exemption, so the executor will need to file an estate tax return to elect the alternative estate values.

B The gross value of the estate has decreased since the taxpayer died.

C The executor will earn more fees if he has to arrange for multiple appraisals.

D Most of the assets in the estate will be sold or distributed to the beneficiaries before the alternative valuation date.

E The assets will qualify for the marital deduction if the alternative valuation is lower than the value on the date of death.

2. Which of the following is a true statement?

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

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

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

D Multiple donors employing serial gifts as a strategy to move significant amounts of wealth cannot include inter vivos gifts.

E None

Answer 1

1. Answer

B) The gross value of the estate has decreased since the taxpayer died.

Explanation

You may not elect alternate valuation unless the election will decrease both the value of the gross estate and the net estate tax

2. Answer

A) Leaving all property to the surviving spouse minimizes 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.

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