Question

Mr. and Mrs. Ybarra, a retired couple in their late 70's, come in to meet you. They are very friendly and living a comfortable retirement due in large part, to the overall size of their estate (nearly $4 million spread over multiple accounts) and their conservative asset allocation.

As you bring up the issue of estate planning, they thank you for your concern, but explain that it is already taken care of. They go on to explain that their attorney has prepared wills for both of them and all of their accounts are titled Jointly with Rights of Surviovorship.

They are surprised and confused when you mention that their heirs might end up receiving only a fraction of those assets after the two of them pass away.

Include the following in your explanation to Mr. and Mrs. Yabarra:

• The transfer tax system

• What is considered part of the estate

• How much is excluded from taxation based on current legislation

•Gross estate versus adjusted gross estate

Answer 1

SOLUTION:-

* IRS has declared that upto 10.98 Million for married couple and upto 5.49 millions for individuals is exempt and beyond this 40% of adjustfed gross estate is calculated as estate tax according to the current legislation.

* Assets include tangiable and intangiable estate. All the property owned by a decedent or is which decedent has interest at the time of death is includes the gross estate.

The gross estate from which cost of outstanding debt and administrative costs associated with the individual are deducted is called the " adjusted gross estate "

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