A married couple with 2 children and 5 grandchildren has an estate valued at $4 million. They decide to use gifts as a means to transfer some of their wealth to their family now and lower the value of their estate.

If for a five-year period the couple gives the maximum tax-free gift to each of their children and grandchildren, the value of their estate would be reduced to:

A) $84,000. B) $420,000. C) $3,090,000. D) $3,916,000.

Question

Business

Nick Jefferson

7 May, 10:38

A married couple with 2 children and 5 grandchildren has an estate valued at $4 million. They decide to use gifts as a means to transfer some of their wealth to their family now and lower the value of their estate.

If for a five-year period the couple gives the maximum tax-free gift to each of their children and grandchildren, the value of their estate would be reduced to:

A) $84,000. B) $420,000. C) $3,090,000. D) $3,916,000.

+3

Answers (1)

Know the Answer?

Cesar Stafford · Answer 1

C) $3,090,000.

Explanation:

The married couple can give to each son or daughter $26,000 per year x 2 children x 5 years = $260,000

The married couple can give to each grandson or granddaughter $26,000 per year x 5 grandchildren x 5 years = $650,000

Their total tax free gifts = $260,000 + $650,000 = $910,000, so their estate will reduce to: $4,000,000 - $910,000 = $3,090,000