Question

1. What is the difference between:  

- Medical Power of Attorney

- Statutory Durable Power of Attorney

- Declaration of Guardian

- Advance Directive to Physicians.

2. Please describe how you arrive at each of the following to determine the tax which will be owed at someone’s death for estate tax purposes:

(a) gross estate;

(b) adjusted gross estate;

(c) taxable estate;

(d) tentative tax base; and

(e) tentative tax. Give an explanation of what you do at each stage.

Answer 1

Part A

A medical power of attorney

The medical power of attorney means that a legal instrument which can be used to select the person that wants to take the healthcare decision on behalf of you. It is also known as the healthcare power of attorney.

A statutory durable power of attorney

This is also a legal document that describes the agreement created by the statue. This gives someone the power to act on behalf of someone with matters of healthcare decisions.

Declaration of guardian

The declaration of a guardian is legal documents to tell the court who you want to become your guardian if there is guardianship proceeding by you.

Advance directive to physicians

It is a legal document to help communication of wishes to the medical practitioners or sometime in the future when we are unable to express our wish because of illness or injury.

Part B

Gross estate

For the tax calculation, it will consider the gross value of the estate at the time of death or amount of debt owed at the time of death. Takes into consideration the total expenses incurred by someone with the deduction.

Adjusted gross estate

It is the net worth of the deceased person after deducting the cost of outstanding debts and administrative costs. Here also the estate tax is levied.

Taxable estate

The taxable estate is calculated by calculating the total asset and deducting the total expenses.

Tentative tax base

It is the sum of the taxable estate and adjusted taxable gifts.

Tentative tax

The tentative tax is based on the tentative tax base which reduced the gift tax based on the rates in effect at the time of death of a person.