Estate Planning & Wealth Transfer Flashcards

What is the federal estate tax exemption amount per individual for 2024?

Answer: $13.61 million

The federal estate tax exemption for 2024 is $13.61 million per individual, meaning estates below this threshold owe no federal estate tax.

Which planning strategy allows a surviving spouse to use the deceased spouse's unused estate tax exemption?

Answer: Portability election

The portability election, filed on a timely estate tax return, allows the surviving spouse to add the deceased spouse's unused exemption to their own.

A Qualified Personal Residence Trust (QPRT) is primarily used to:

Answer: Transfer a home to heirs at a reduced gift tax value

A QPRT transfers a residence to heirs at a discounted gift tax value by retaining the right to live in the home for a set term.

What is the purpose of a spendthrift clause in a trust?

Answer: It prevents beneficiaries from assigning their interest to creditors

A spendthrift clause protects trust assets from a beneficiary's creditors by preventing the beneficiary from assigning or pledging their interest.

Which document specifies end-of-life medical care preferences and is separate from a financial power of attorney?

Answer: Living will / advance directive

A living will or advance directive documents a person's medical care wishes, such as life-sustaining treatment preferences, independent of financial decisions.

Under the rule against perpetuities, what is the main concern with dynasty trusts in most states?

Answer: Traditional law limits how long a trust can last after creation

The traditional rule against perpetuities limits trust duration, though many states have modified or abolished this rule to allow long-lasting dynasty trusts.