Oscar (age 70) and Maggie (age 60) were married and jointly owned a personal residence valued at $3,800,000 when Oscar died in 2016. Oscar also owned stocks valued at $4,700,000; an art collection valued at $1,400,000; a retirement account valued at $900,000 (contributions were entirely from pretax income); $800,000 in cash; and $1,000,000 in other miscellaneous assets. Oscar’s will specified that when he died his half of the personal residence would go to Maggie but that all his other assets would pass to his four children because Maggie has sufficient income from a trust fund she inherited from her grandfather. Oscar has made no previous taxable gifts.

a. What was Oscar’s estate tax liability when he died in 2016?

b. Each of Oscar’s four children has three children (total of 12 grandchildren). If Oscar had begun transferring assets to his children and grandchildren in years 2011 through 2016, how much could he have removed in value from his estate over those six years through gift splitting and making annual transfers equal to the gift exclusion?



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