Exam 23: Estates and Trusts

Richard Stands passed away at on September 2,2011.The probate court ruled that most assets could be excluded from estate inventory.Ty Republic has been appointed to serve as executor for the estate.The estate assets consisted of the following at that date: Required: Prepare an inventory of estate assets as of September 2,2011.

Josh Drake died on May 1,2011.He left his entire estate,with a fair value of $6,200,000 to his sole surviving family member,his daughter,DeeDee. Prior to any distribution of assets,Josh's estate reflected the following details: Required: Calculate the federal estate tax on Mr.Drake's estate.You may ignore any state-level inheritance taxes and assume that the federal estate tax rate is 45%.

You are serving as the executor for the estate of Scott Michaels,who passed away on June 28,2011.The following transactions occur during the balance of June and July,2011. 1.On July 11,you issued a check to pay Scott's final medical expenses of $28,000. 2.In Scott's will,he wanted $90,000 given to the American Society for the Prevention of Cruelty to Animals (ASPCA).After examining the assets,you determined that the estate's assets will adequately cover all expenses and specific devises,so on July 13,you issued a check to the ASPCA for $90,000. 3.On July 15,you received a check in the amount of $27,900 from First State Bank of Greenville.It is the maturity value and interest from a certificate of deposit in the amount of $25,000 that was not included in the estate's initial inventory.The CD matured on June 30,2011. 4.On July 26,you received interest of $2,000 on Greenville City bonds.Interest of $180 was earned after the date of death.The balance was earned prior to death,and had been accrued.The bonds were included in the initial inventory. 5.On July 28,you issued a check to pay Scott's funeral expenses of $7,600. Required: Prepare the necessary journal entries for the above transactions.You may ignore any estate or income taxes.

Oscar Lloyd is the trustee for the Petra/Hobbes Trust.The following transactions occurred during 2011.Petra and Hobbes,two cats are going to reside with Oscar Lloyd,the trustee and devoted cat lover. February 18 The Petra/Hobbes Trust was established at First State Bank by depositing $200,000 cash. February 19 $195,000 was deposited into a three-year certificate of deposit earning 6% a year.Interest is paid semi-annually.$5,000 was deposited into a money market account paying 4% annual interest.Interest is paid on the average daily balance for the past year. February 20 Paid $368 for cat food,cat toys,and kitty litter at Cats R Us. February 24 Bought assorted cat DVDs for Hobbes and Petra.The DVDs were a combination of fish,bird,and squirrel movies.Paid $182 for the DVDs. June 25 Paid $405 for cat food,toys,and kitty litter. August 19 Deposited one-half year's interest income of $5,850 into the money market account. December 22 Paid $722 for cat food,cat toys,kitty litter,Christmas presents for Petra and Hobbes. Required: Prepare the necessary journal entries for the above transactions.You may ignore any tax effects.

Which of the following are entitled to the remainder of the estate after all other rightful claims on the estate have been satisfied?

In reference to the Uniform Probate Code,which of the following statements is correct?

In reference to estate principal and income,which of the following statements is correct?

Rusty Nail died in the summer of 2011.The following transactions occurred relating to Rusty's estate. 1.Rusty's estate included a $50,000 Certificate of Deposit.When Rusty died,there was $250 accrued but unpaid interest.When the check was received for the normal semiannual interest payment,it was in the amount of $1,250. 2.Rusty's will requested a specific transfer to the local playhouse in the amount of $20,000.Avery's estate should be adequate to cover all obligations and devises,and the amount is paid. 3.A fee for probate court is paid amounting to $1,400. 4.Funeral expenses are paid amounting to $13,000. 5.A bill is received from the anesthesiologist relating to Rusty's last hospital stay for $22,000.The bill is not covered by insurance,and was not included in the estate inventory.The bill is verified and paid. Required: Prepare the journal entries for the listed transactions.Disregard the impact of estate and income taxes.

Oscar Lloyd is serving as the executor for the estate of Dixie Cooper,who passed away on January 28,2011,at the age of 98.Dixie's estate consisted of Treasury bonds with a maturity value and fair market value of $1,400,000,$4,000 in her checking account,and $50,000 in a Certificate of Deposit with First State Bank of Springfield.Total accrued interest at the time of death was $44,000,made up of $2,000 from the CD and $42,000 from the bonds. Dixie left a valid will,which provided that most of her estate would be inherited by her two nephews,Jimmy Johns and Joey Johns.In addition,Dixie provided that $200,000 be transferred to a trust account for her faithful cats,Petra and Hobbes.Income from the trust would be used to care for Hobbes and Petra.Upon their passing,the remaining funds would then transfer to Operation Kindness,an organization that cares for cats and dogs. Mr.Lloyd will also serve as the fiduciary for the trust.He has determined that no state or federal inheritance taxes are due.The limited estate income is also free from any federal or state income tax.The following transactions occurred during February. 1.On February 3,Oscar sold the treasury bonds for $1,460,000.$1,400,000 was for the fair market value of the bonds,$42,000 was for interest accrued to the time of Dixie's death,and the remaining $18,000 was for accrued interest since Dixie's death.Estate income will be used to pay final medical expenses,and if anything is left,funeral expenses. 2.On February 11,Oscar issued a check to pay Dixie's final medical expenses of $11,900. 3.On February 15,Oscar received a check in the amount of $52,000 from First State Bank of Springfield.It is the maturity value and interest from a certificate of deposit in the amount of $50,000.The CD matured on January 22,2011. 4.In Dixie's will,she wanted to give $150,000 to the American Humane Society.After examining the assets,Oscar determined that the estate's assets will adequately cover all expenses and specific devises,so on February 3,he issued a check to the organization for $150,000. 5.On February 18,Oscar transferred $200,000 to a trust account at First State Bank to fund the trust,to care for the cats. 6.On February 25,Oscar issued a check to pay Dixie's funeral expenses of $9,800. 7.On February 26,Oscar paid himself the $4,000 executor's fee specified in Dixie's will. Assume that on February 28,2011,Oscar finalized the estate and transferred the balance of the estate assets to Dixie's nephews,Jimmy Johns and Joey Johns.Each received one-half of the residual estate. Required: 1.Prepare the closing entry on February 28,2011. 2.Prepare the charge-discharge statement for the estate of Dixie Cooper for the period January 28 through February 28,2011.

In reference to accounting for trusts or estates,which of the following statements is correct?

Under the amended Uniform Probate Code,if the decedent dies intestate,and if there are descendants from a prior marriage or relationship,the surviving spouse receives what?

Oscar Lloyd is serving as the executor for the estate of Dixie Cooper,who passed away on January 28,2011,at the age of 98.Dixie's estate consisted of Treasury bonds with a maturity value and fair market value of $1,400,000,$4,000 in her checking account,and $50,000 in a Certificate of Deposit with First State Bank of Springfield.Total accrued interest at the time of death was $44,000,made up of $2,000 from the CD and $42,000 from the bonds. Dixie left a valid will,which provided that most of her estate would be inherited by her two nephews,Jimmy Johns and Joey Johns.In addition,Dixie provided that $200,000 be transferred to a trust account for her faithful cats,Petra and Hobbes.Income from the trust would be used to care for Hobbes and Petra.Upon their passing,the remaining funds would then transfer to Operation Kindness,an organization that cares for cats and dogs. Mr.Lloyd will also serve as the fiduciary for the trust.He has determined that no state or federal inheritance taxes are due.The limited estate income is also free from any federal or state income tax.The following transactions occurred during February. 1.On February 3,Oscar sold the treasury bonds for $1,460,000.$1,400,000 was for the fair market value of the bonds,$42,000 was for interest accrued to the time of Dixie's death,and the remaining $18,000 was for accrued interest since Dixie's death.Estate income will be used to pay final medical expenses,and if anything is left,funeral expenses. 2.On February 11,Oscar issued a check to pay Dixie's final medical expenses of $11,900. 3.On February 15,Oscar received a check in the amount of $52,000 from First State Bank of Springfield.It is the maturity value and interest from a certificate of deposit in the amount of $50,000.The CD matured on January 22,2011. 4.In Dixie's will,she wanted to give $150,000 to the American Humane Society.After examining the assets,Oscar determined that the estate's assets will adequately cover all expenses and specific devises,so on February 3,he issued a check to the organization for $150,000. 5.On February 18,Oscar transferred $200,000 to a trust account at First State Bank to fund the trust,to care for the cats. 6.On February 25,Oscar issued a check to pay Dixie's funeral expenses of $9,800. 7.On February 26,Oscar paid himself the $4,000 executor's fee specified in Dixie's will. 8.On February 28,Oscar finalized the estate and transferred the balance of the estate's assets equally between Dixie's nephews,Jimmy Johns and Joey Johns. Required: 1.Prepare an inventory of estate assets at the time of Dixie's death and record the necessary journal entries to create the estate. 2.Prepare journal entries to record the estate's transactions during February.

Suzanne Quincy passed away on October 25,2011.Suzanne left behind a limited estate,so there are no tax issues to address,however,she owned a dog,Buddy,and Suzanne provided for Buddy in the will.Suzanne left $100,000 for Buddy's care,and the remainder of her estate was left to her neighbor,Agnes.Suzanne's estate had the following events and transactions in the month following her death. 1.Her assets were converted to cash at their fair value as inventoried: Mutual funds,$270,000;and Residence,$209,000.There were no other reportable assets. 2.Transferred $100,000 to a trust account at Second National Bank to provide care for Buddy,and delivered Buddy to Paws and Claws Pet Farm,his new home. 3.Wrote check to pay for funeral expenses for $9,600. 4.Wrote check to pay for executor fees as designated in the will of $1,000. 5.Wrote check to pay balance of estate to Agnes. Required: Prepare the journal entries for the listed transactions.Disregard the impact of estate and income taxes.

What is the dollar amount of the federal lifetime maximum gift tax exclusion?

Avery died testate early in 2011.The following transactions occurred relating to Avery's estate. 1.Avery's estate included bonds with a fair (market)value of $120,000.On the date of Avery's death,there was $2,000 of accrued but unpaid interest.Two months after Avery's death,a check arrived in the amount of $3,000,representing the normal semiannual interest payment. 2.Avery's will stated a specific transfer to the Bird Sanctuary in the amount of $10,000.Avery's estate should be adequate to cover all obligations and devises,and the amount is paid. 3.Funeral expenses amounted to $12,500. 4.A bank statement is received from the First National Bank indicating a cash balance of $8,600.This bank account was not known or included on the estate inventory. 5.Probate fees are paid to the court amounting to $900. Required: Prepare the journal entries for the listed transactions.Disregard the impact of estate and income taxes.

You are serving as the executor for the estate of Dr.Mary Carlson.The following transactions occur during August 2011.Dr.Carlson died on July 30,2011. 1.On August 6,you received interest of $3,000 on State of Colorado general revenue bonds.Interest of $1,600 was earned after the date of death.The balance was earned prior to death,and had been accrued.The bonds were included in the estate's initial inventory.The maturity value and fair market values of the bond are $100,000. 2.On August 11,you issued a check to pay a probate court fee of $1,120. 3.The estate included 10,000 shares of Dasher International's common stock,valued at $40 per share,which were properly included in the estate's initial inventory.On the date of her death,there were no outstanding dividends receivable.On August 14,you read that a dividend of $1 per share was declared. 4.In Mary's will,she wanted $100,000 given to the National Zoo. After examining the assets,you determined that the estate's assets will adequately cover all expenses and specific devises,so on August 23,you issued a check to the Zoo for $100,000. 5.On August 25,you issued a check to pay Mary's final medical expenses of $16,700. 6.On August 28,you received a check for $10,000 for the common stock dividends paid by Dash International. Required: Prepare the necessary journal entries for the above transactions.You may ignore any estate or income taxes.

Silvia Peacock has been appointed to serve as the executor of the estate of Mr.Mickey Babay,who passed away at the age of 104 on April 5,2011.On April 5,2011,Mr.Babay's assets consisted of the following: The probate court has ruled that any other personal effects may be excluded from Mr.Babay's estate inventory. Required: Prepare an inventory of estate assets on April 5,2011.

Mary Contrary is the executor for the estate of Belle Silver.Belle owned a home with a fair value of $200,000.The home has a remaining mortgage amount of $80,000.Mary also has personal effects worth $8,000,an investment portfolio with a fair value of $150,000 on the date of death,and approximately $7,500 in cash in various accounts.The home was left to her daughter in the valid will that Belle had executed prior to her death. Belle did not have a surviving spouse,but her daughter is a minor,who is independently wealthy after inventing a cutting-edge software program.The state in which Belle resided,allows a $15,000 homestead allowance,and a $10,000 personal effects entitlement. After taking an inventory,and converting all of the assets,except for the home and the personal effects,into cash,there is $159,000 for Mary to distribute to the appropriate devises,beneficiaries,and creditors. Mary has identified the following expenses and devises: 1.Belle's unpaid final medical expenses were $24,000. 2.Belle left a devise of $100,000 to her church. 3.The costs and expenses of administering the estate were $21,000. 4.Real estate taxes of $3,600 are past due. 5.The unpaid funeral expenses were $8,700. Required: Prepare a schedule that will list the disbursements of assets.Assume that the state in which Belle resided has adopted the Uniform Probate Code.

Under the Uniform Probate Code,the personal representative must inform the heirs and devisees of his or her appointment and provide other selected information within how many days of the appointment?

Under the Revised Uniform Principal and Income Act,gains or losses incurred on investments that occur after the death of the decedent