Inter vivos gifts and estate taxes

CFA Level III
#1

(I know gift taxes apply, but …)

Are estate taxes applicable for inter vivos gifts?

If yes, at who’s rate - the grantor’s estate tax rate or the beneficiary’s estate tax rate?

#2

In all the questions i have seen on this topic, estate taxes are paid by the wealthy grantor on their estate. This is why the transfer of as a gift is normally better, as the estate will only be subject to gift taxes at the income rate of the beneficiary

#3

i think gift tax wil be taxed at the benefcary rate and a bequest is taxed at the deceased rate. that is the hole reason there is a dilemma of when is moste optimal to transfer wealth.

For trusts:

  • if it is an irrevocable trust, i think the beneficiary is responsible.

  • if it is a revocable trust, the grantor is responsible.

#4

Just remember that during-life gift transfers don’t always generate tax liabilities. There are periodic and lifetime gifting allowances to keep in mind.

#5

Btw, do you guys learn the RV formulas for gifts vs. bequests? Couldn’t find an exam where they were tested, but could make sense to know them?

#6

i don’t memorize them i just use common sense