Eric Has $5 Million of Property That He Wants to Leave

question 118

Essay

Eric has $5 million of property that he wants to leave to his four children. He is considering making a current gift of the property (rather than leaving the property to pass through his will). Eric has made many prior taxable gifts and additional taxable transfers will be subject to the highest transfer tax rate. Determine how much estate tax Eric will save if he gifts the property now and survives at least three years, during which time the property appreciates to $5.5 million? Ignore the time value of money in your calculation.

---

Definitions:

Consumer Financial Protection Bureau

A U.S. government agency tasked with ensuring that consumers are treated fairly by banks, lenders, and other financial institutions.

Bankruptcy

A legal process for individuals or businesses that are unable to repay their outstanding debts.

Consumer Reporting Agency

is an organization that compiles and provides consumer credit information to entities like creditors, employers, and landlords, impacting decisions on lending, employment, and housing.

Obsolete Information

Information that is no longer relevant or useful due to changes in technology, knowledge, or societal norms.