Question

The following property is NOT included in the gross estate of a decedent:

a. Life insurance transferred within 3 years prior to the date of a death.
b. An irrevocable trust established by the decedent in which all income is retained for life.
c. A $24,800 gift in fee simple using both spouse's annual gift tax exclusion.
d. Funds in a qualified retirement plan of the decedent with a named beneficiary.

Answer 1

The $24,800 gift in fee simple utilizing both spouse's annual gift tax exclusion is not included in the gross estate of a decedent.

Step-by-step explanation:

The property NOT included in the gross estate of a decedent is the $24,800 gift in fee simple using both spouses' annual gift tax exclusion. Gifts utilizing the annual gift tax exclusion fall outside the purview of the gross estate. The annual exclusion permits tax-free gifts up to a specified amount, adjusted annually for inflation, and these gifts are not subject to the gift tax or considered part of the gross estate.

Conversely, life insurance transferred within three years of death, an irrevocable trust with retained income for life, and funds in a qualified retirement plan with a named beneficiary are typically included in a decedent's gross estate for estate tax purposes. Understanding these distinctions is crucial for effective estate planning and minimizing tax implications.