Personal financial and wealth planning
The Wealth Transfer Plan
Unify gifts and estate under one 15,000,000 exemption and 40 percent rate, then shelter growth with the marital deduction, portability, or a bypass trust.
How the exam words it
- -The stem gives a taxable estate and asks the tax using the 15,000,000 basic exclusion and the 40 percent top rate.
- -It asks which transfer is deductible, testing the unlimited marital and charitable deductions.
- -It contrasts portability of the DSUE with a bypass trust and asks which shelters future appreciation.
- -It gives prior taxable gifts and asks how they affect the exemption remaining at death.
The playbook
- 1Compute transfer tax as 40 percent of the amount above the 15,000,000 exclusion, after deductions and after adding prior taxable gifts.
- 2Apply the unlimited marital and charitable deductions, which use no exemption, before measuring the taxable transfer.
- 3Choose a bypass trust to shelter post-death appreciation, since ported DSUE is fixed and not indexed for growth.
- 4Reduce the exemption available at death by lifetime taxable gifts, because gift and estate tax are unified.
The trap
Limiting the marital deduction, or assuming portability shelters growth like a bypass trust. The marital deduction is unlimited, and ported DSUE is a fixed amount that does not capture future appreciation.
How the exam varies it
The same pattern, re-skinned along these axes:
Taxable estate and the 40 percent rate above the exclusionUnlimited marital and charitable deductionsPortability of the DSUE versus a bypass trust for sheltering growth
Drill this pattern
8 questions of The Wealth Transfer Plan from across the AUD topics. Clear it by getting 5 right with a streak of 3.