Need help for clarification of the answer at the question 2-c
Because gift taxes are paid from Puente’s estate, the size of his taxable estate is reduced. Because his daughter’s estate will not be taxed, this lowers the ultimate estate tax that will be paid. The present value of this tax benefit is equal to the gift tax rate, multiplied by the estate tax rate, multiplied by the size of the gift. Thanks !
Remember the formula of relative value of taxed gift paid by donor ? In the denominator the estate will be multiplied by (1-Te) this will reduces the estate value right ? Yes it will and the receiver will save taxes paid I’m the future.