Exam 19: Accounting for Estates and Trusts

An inter vivos trust was created by Isaac Posney. Isaac owned a large department store in Juggins, Utah. Adjacent to the store, Isaac also owned a tract of land that was used as an extra parking lot when the store was having a sale or during the Christmas season. Isaac expected the land to appreciate in value and eventually be sold for an office complex or additional stores. Isaac placed the land into a charitable lead trust, which would hold the land for ten years until Isaac's son would turn 21. At that time, title would be transferred to the son. The store will pay rent to use the land during the interim. The income generated each year from this usage will be given to a local church. The land was currently valued at $416,000.During the first year of this arrangement, the trustee recorded the following cash transactions: Required:Prepare all required journal entries for this trust fund including the entry to create the trust.

An executor will normally carry out all the following tasks except:

The provisions of a will currently undergoing probate are: "One thousand shares of Wal-Mart Stores stock to my son; $10,000 in cash from my Astoria Savings Bank account to my brother; $5,000 in cash to my daughter; and any remaining property divided equally between my son and daughter."What is the remaining principal to be divided equally between the son and the daughter?

During the most recent year, an estate generated income of $26,000: The interest income was conveyed immediately to the beneficiary stated in the decedent's will. Dividends of $1,560 were given to the decedent's church.Prepare a schedule to show the amount of taxable income.

In an executor's accounting for an estate, debts and other obligations are recorded

The party to receive a distribution of principal from an estate is legally called a(n):

The executor of Danny Mack's estate has listed the following properties at fair value: Cash $200,000, Life Insurance Receivable $500,000, Investment in Stocks and Bonds $50,000, Rental Property $100,000, and Personal Property $80,000. Additionally, the executor found $100,000 of various debts incurred before the decedent's death. The cost of Danny Mack's funeral was $20,000.Prepare the journal entry to record the distribution of $4,000 to Anna Lee, an income beneficiary.

The executor of the Estate of Kate Tweed discovered the following assets (at fair value): The will of Kate Tweed had the following provisions:$195,000 in cash went to Victor Vickery.All shares of PepsiCo went to Duchess Doyle.The residence went to Louis Tweed.All other estate assets were to be liquidated with the resulting cash going to the Sacred Church of Liberty, Missouri.Debts of $52,000 were discovered.Prepare the journal entry to record the transaction.

In settling an estate, what is the meaning of the term devise?

The terms of a will currently undergoing probate are: "A gift to my brother Chris of $40,000 cash; to my son Eric, $75,000 from my Redstone Savings Bank account; and to my daughter Lauryn, all of my remaining property." At the time of death, the balance in the savings account was $60,000, and there was additional cash (after payment of funeral expenses and all claims against the estate) of $95,000.The decedent resided in a state that does not treat a demonstrative legacy shortfall as a general legacy. How much would Lauryn have received from the estate?

Under what circumstance does an estate have an executor?

Which of the following is not a type of trust used for estate planning?

The terms of a will currently undergoing probate are: "A gift to my brother Chris of $40,000 cash; to my son Eric, $75,000 from my Redstone Savings Bank account; and to my daughter Lauryn, all of my remaining property." At the time of death, the balance in the savings account was $60,000, and there was additional cash (after payment of funeral expenses and all claims against the estate) of $95,000.The gift to Eric is a

The trustor is the

When an estate does not have sufficient assets to satisfy all claims against it, what claim has the highest priority?

A testamentary trust is a trust

The executor of the Estate of Kate Tweed discovered the following assets (at fair value): The will of Kate Tweed had the following provisions:$195,000 in cash went to Victor Vickery.All shares of PepsiCo went to Duchess Doyle.The residence went to Louis Tweed.All other estate assets were to be liquidated with the resulting cash going to the Sacred Church of Liberty, Missouri.Title to the residence was conveyed to Louis Tweed. Prepare the journal entry to record the transaction.

The executor of the estate of Yelbert Toper recorded the following information: Debts of $22,100 still remain to be paid. The shares of Dell Technologies stock were conveyed to the appropriate beneficiary. Executor fees are allocated based on total charges for principal and for income.Required:Prepare a charge and discharge statement for this estate.

The terms of a will currently undergoing probate are: "A gift to my brother Chris of $40,000 cash; to my son Eric, $75,000 from my Redstone Savings Bank account; and to my daughter Lauryn, all of my remaining property." At the time of death, the balance in the savings account was $60,000, and there was additional cash (after payment of funeral expenses and all claims against the estate) of $95,000.The decedent resided in a state that treats a demonstrative legacy shortfall as a general legacy. How much would Eric have received from the estate?

What are the goals of probate laws? (1) Gather, preserve, and account for all of the decedent's property.(2) Carry out an orderly and fair settlement of all debts.(3) Discover and follow the decedent's intent for the remaining property.