How much will each of her children receive after taxes

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Kathryn and her husband earned a considerable fortune during their working lives, but Kathryn is now retired and her husband is deceased. Kathryn has $20 million available to pass along to her two children, and has made provisions in her will to divide her estate equally between the children. The $20 million currently sits in a safe deposit box in a bank, where unfortunately it earns no return (though of course it also does not lose value).

Question:

Assume that the estate and gift tax rate is 40 percent, and there is a $10 million exemption, so any portion of an estate or lifetime gifts above $10 million is subject to a 40 percent tax. If Kathryn leaves the $20 million in her safe deposit box until she dies, then how much will each of her children receive after taxes?

Reference no: EM13699555

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