Roy dies and is survived by his wife, Marge. Under Roy’s will, all of his otherw
ID: 2469293 • Letter: R
Question
Roy dies and is survived by his wife, Marge. Under Roy’s will, all of his otherwise uncommitted assets pass to Marge. Based on the property interests listed below, determine the marital deduction allowed to Roy’s estate.
a. Timberland worth $1.2 million owned by Roy, Marge, and Amber (Marge’s sister) as equal tenants in common. Amber furnished the original purchase price.
b. Residence of Roy and Marge worth $900,000 owned by them as tenants by the entirety with right of survivorship. Roy provided the original purchase price.
c. Insurance policy on Roy’s life (maturity value of $1 million) owned by Margeand payable to her as the beneficiary.
d. Insurance policy on Roy’s life (maturity value of $500,000) owned by Roy with Marge as the designated beneficiary.
e. Distribution from a qualified pension plan of $1.6 million (Roy matched hisemployer’s contribution of $500,000) with Marge as the designated beneficiary
Explanation / Answer
a) Since the property is owned by tripatriate and there is no right of survivorship hence there is no deduction given for such property
b) the amount that can be claimed as deduction by marge ie roy's wife is the half amount since the property is owned by both husband and wife therefore the amount is $450000
c) As per the tax law any amount received from the life insurance as the maturity amont is not taxable in whoseever the insurance is taken therefore the entire amount which marge will receive is not taxable
d) maturity amount of 500000 will get deduction to marge hence it is received to wife and it is not taxable.
e) Any amount received from a qualified pension fund is always clubbed and taxable income from other sources and hence the amount received of 1.6million out of which 500000 roy's contribution is allowwed as deduction.
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