Unit 4 Estate Planning FINA 4397
What is a reversion?
A reversion is an example of a future interest. A reversion gives the owner (transferor) the right to have all or part of the transferred property returned after an intervening interest.
Which of the following statements regarding legal and equitable ownership of property is(are) CORRECT?
A trust is a common example of property ownership in which legal and equitable ownership is split between different parties. Trust beneficiaries have equitable ownership of the trust assets.
Which of the following are characteristics of community property?
A joint interest is held by spouses. Upon the death of a spouse, both halves of community property receive a stepped-up basis. One-half of the value of community property is a probate asset when the first spouse dies.
Which of the following statements regarding community property is(are) CORRECT?
Assets inherited by one spouse during marriage generally are not community property. Assets purchased with community assets by either spouse during marriage are community property. Community property does not avoid probate. Assets acquired before marriage remain separate property
Which of the following property ownership arrangements are limited to spouses only? Tenancy in common. Joint tenants with right of survivorship (JTWROS). Tenancy by the entirety. Community property.
Community property and tenancy by the entirety can only be owned by spouses Joint tenants with right of survivorship (JTWROS) is often used by spouses to avoid probate. This form of property ownership is not limited to spouses; it can be entered into by nonspouses.
Mike and Jane, a married couple, bought a condominium 15 years ago for $200,000 as joint tenants with right of survivorship (JTWROS). When Jane died, the condominium was valued at $500,000. Four years after Jane's death, Mike sells the condominium for $600,000. What is the amount of Mike's capital gain?
Mike received a stepped-up basis in one-half of the condominium at Jane's death. He retains his original basis of $100,000 in the other half. His total basis at the time of the sale is $350,000, so his gain is $250,000.
Which of the following statements regarding property owned as joint tenants with right of survivorship (JTWROS) between spouses is(are) CORRECT?
One-half of the property is included in the gross estate of the decedent spouse and one-half of the property receives a stepped-up basis.
Which of the following are considered to be community property when owned by spouses while living in a community property state?
Property acquired through the efforts of either spouse during their marriage.
Which of the following statements regarding tenancies in common are CORRECT?
Property is owned concurrently by 2 or more people. Each tenant's share is an undivided part of the entire property. There are no survivorship rights.
When the owner-grantor transfers property and has the right to have all or part of the transferred property returned after an intervening interest, the owner-grantor's interest is known as a:
reversion
Which of the following is a future interest in property?Which of the following is a future interest in property?
Remainder
Tenancy Rules
Tenancy by the entirety is a limited form of joint tenancy with right of survivorship that can exist only between spouses. It provides protection against the claims of each spouse's individual creditors, but not against the claims of joint creditors. It is not recognized in all states.
What form of property ownership gives a right to possess and enjoy property for a fixed period?
Term of Years
The maximum ownership interest a person can have in property is known as ___________. If Austin gives land to Katherine to own outright, this type of interest in property is known as a___________.
fee simple
Property inherited by or gifted to an individual spouse during marriage is considered ______________ property.
separated
