James and Susan Wagner have assets with fair market values of $12,700,000 and $4,800,000,…


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James and Susan Wagner have assets with fair market values of $12,700,000 and $4,800,000, respectively. James has been diagnosed with a terminal illness and is expected to pass away within the current year. James wants to minimize his estate taxes, and any appropriate planning should consider the following factors: a. James Wagner has debts of $210,000 against the assets in his estate. b. It is estimated that administrative and funeral expenses will be $25,000 each for James and Susan. c. Susan wanted to make contributions of $4,000,000 to charity during her remaining life expectancy. It is estimated that Susan would be able to live comfortably for the balance of her life. d. Assume that Susan will live for three years after the year of her husband’s death. e. It is anticipated that at the time of Susan’s death her estate would have appreciated by $150,000 per year for three years. f. Neither James nor Susan has made any gifts during the current year. g. The couple has two children and three grandchildren. One of the grandchildren is attending the University of Wisconsin and is expected to graduate in two years. Annual tuition costs are $25,000 per year and $50,000 will be paid directly to the university. h. James has agreed to make a $200,000 charitable contribution to the Sierra Club out of his estate. i. If any trusts are created, the income from the trust will benefit the surviving spouse, and any corpus will ultimately pass to the children. Required Develop an estate plan for the Wagners that would minimize estate taxes and incorporate the above factors. The unified transfer tax rates and exclusion amounts set forth in the text should be used. Assume that annual nontaxable gifts up to $14,000 per donor will be made to all children and grandchildren to whatever extent possible. View Solution:
James and Susan Wagner have assets with fair market values