Exam 23: Estates and Trusts

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

You are serving as the executor for the estate of Dr.Mary Carlson.The following transactions occur during August 2014.Dr.Carlson died on July 30,2014. 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.

Cindy Lou's parents passed away while she was still dependent on them,and their will designated that a trust should be established with their estate proceeds to care for her.The following transactions occurred in the first two months following their deaths. 1.The trust account was opened with the $2,000,000 in funds received from the estate.The funds were deposited into a non-interest bearing checking account to be used for expenses. 2.$1,500,000 was put into a multi-year certificate of deposit which earned 3% annually,with interest paid monthly back to the checking account. 3.One month's interest from the certificates of deposit was received. 4.The bank's trust administration fee was paid for $65. 5.Tuition was paid for the boarding school where Cindy Lou was living for $6,500. Required: Prepare the journal entries for the listed transactions.Disregard the impact of estate and income taxes.

Which of the following phrases is frequently used to refer to estate or trust accounting?

Rusty Nail died in the summer of 2014.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.

Under the Uniform Probate Code,the term "personal representative" refers to which of the following?

Oscar Lloyd is the trustee for the Petra/Hobbes Trust.The following transactions occurred during 2014.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 is a gift of an object to a devisee?

Buddy,a dog,is cared for by a trust set up by his owner's will.The following transactions occurred for the trust. 1.The trust was established with $100,000 from his owner's estate,by deposit to a savings account. 2.A check is written to Paws and Claws Puppy Farm to cover the first month of Buddy's room and board,for $680. 3.A check is received for interest earned on the savings account amounting to $417. 4.Buddy dies.Paws and Claws sends a final room and board bill for $430,with additional charges for Buddy's burial of $270.The invoice is paid. 5.The balance of the trust is turned over to the Humane Society,as prescribed by Buddy's owner's will,and the trust is closed. Required: Prepare the journal entries for the listed transactions.Disregard the impact of estate and income taxes.

What is the current annual gift amount that can be left to an individual donee,without being subject to a federal gift tax?

Avery died testate early in 2014.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.

What is the document prepared by the executor or administrator to show accountability for estate property received and maintained or disbursed in accordance with the will?

In reference to the probate process,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?

Under the Uniform Probate Code,the personal representative must publish for what time period a notice in a newspaper of general circulation in the county in which the decedent resided?

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

Which type of trust is created pursuant to a will?

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?

If estate assets are insufficient to pay all claims in full,under the Uniform Probate Code which of the following would be paid first?

John Doe's will states that all assets he had should be transferred to a trust to cover living expenses for his spouse,who he feels will not be able to handle her own financial affairs without advice and supervision.Upon his spouse's passing,the trust will be converted to cash and distributed to their only daughter,Jane.The probate court already ruled on which assets could be excluded from the estate,and all tax issues were addressed,leaving the following inventory of assets from the estate: Required: Prepare the journal entry for the creation of the trust.