Contents

C H A P T E R E I G H T8Estate and Gift TaxConsiderations§ 8.1 Introduction 223§ 8.2 Federal Gift Tax 225(a) Definition of Gift 225(b) Imposition of GiftTax in General 226(c) Scope of CoveredTransfers and Property 226(d) Powers ofAppointment 227(e) Transfers DeemedNot to Be Gifts 227(f) Taxable Gifts 228(g) Exclusions fromTaxable Gift 228(h) Annual Exclusion 228(i) Valuation of GiftTransfers 229(j) Basis of Gifted Property 230(k) Gift Tax Deductions 231(l) Liability for Gift Tax 234(m) Split Gifts BetweenSpouses 234(n) Disclaimers 234§ 8.3 Federal Estate Tax 234(a) Gross Estate 234(b) Taxable Estate 238(c) Time of Valuationof Gross Estate 244(d) Basis of TransferredProperty 245§ 8.4 Unification of Taxes 245§ 8.5 Generation-SkippingTransfer Tax 246§ 8.6 Estate Planning Principles 249(a) Estate Reduction 249(b) Estate Freezesand SpecialValuation Rules 249(c) Deferral 251(d) Generation-SkippingTransfers 251(e) Credit-MaximizingTrusts andTransactions 252(f) Estate Equalization 252(g) Revocable LivingTrusts 252(h) Disclaimers 253(i) Last Will 254(j)Durable Power ofAttorney 255(k) Living Will 255§ 8.7 Remainder Interests 255(a) In General 255(b) Will Contests 256(c) Reformations 259§ 8.8 Ascertainability 263§ 8.1 INTRODUCTIONFederal estate and gift tax law came into existence in 1916, and has been a continuousand growing (and controversial) component of the federal tax schemeever since. Unlike federal income tax law, federal estate and gift taxes are an 223