Exam 23: Estates and Trusts

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

Warren Peace passed away,with his will leaving the bulk of all his worldly possessions to his friend Leo.The following transactions occurred with respect to Warren's estate. 1.Warren's estate inventory included 10,000 shares of Newberry Industries,selling at the time of Warren's death at $56 per share.There were no outstanding dividends at the time Warren died,but two weeks later,a $1.00 per share dividend was declared. 2.Warren only designated one item that was not to be left to Leo.Warren's family had a signed,first-edition copy of a classic novel that was valued and included in the estate inventory at $67,000,which Warren left to the local library.The book is located and delivered. 3.Funeral expenses are paid in the amount of $7,880. 4.A statement comes from the insurance company indicating there are multiple charges from Warren's final hospital stay that will not be covered and are the responsibility of the estate.These fees amount to $39,000 and were not known at the time the estate inventory was prepared.The charges are confirmed and will be paid when the separate bills arrive from the hospital and professionals who billed them to the insurance company. 5.A check is received from Newberry Industries for the dividends declared in the first transaction,above. Required: Prepare the journal entries for the listed transactions.Disregard the impact of estate and income taxes.

A deceased person that has a valid will in force at the time of death is said to have died intestate.

You are serving as the executor for the estate of Scott Michaels,who passed away on June 28,2014.The following transactions occur during the balance of June and July,2014. 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 30,2014. 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.

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?

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

A trust created pursuant to a will is referred to as a testamentary trust.

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.

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.

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.