Question - When Yaakov died in March 2013, his gross estate was valued at $8.5 million. The marginal estate tax rate exceeded his estate's marginal income tax rate because the estate collected only about $5,000 of income. Yaakov willed his spouse $1.2 million. His taxable estate (before marital deduction) was comprised of the following:
Gross estate $8,500,000
Debts (350,000)
Administration expenses (125,000)
Funeral expenses (16,000)
Charitable contribution to church (150,000)
Assume Yaakov's will also provided for setting up a trust to be funded with $550,000 of property with a bank named as trustee. His wife is to receive all the trust income semiannually for life, and upon her death the trust assets are to be distributed equally among Yaakov's children and grandchildren.
a. What was the amount of Yaakov's taxable estate? Provide two possible answers. (with & without any election)
b. Assume Yaakov's widow died in December 2013. With respect to Yaakov's former assets, which items will be included in the widow's gross estate? Provide two possible answers, but you need not indicate amounts.