Exam 19: Accounting for Estates and Trusts

The provisions of a will currently undergoing probate are: "One thousand shares of Wal-mart stock to my son; $10,000 in cash from my savings account to my brother; $5,000 in cash to my daughter; and any remaining property divided equally between my son and daughter." At the time of death, the estate included 1,000 shares of Wal-mart stock and $6,000 cash in the savings account. What would the brother have received from the settlement of the estate?

A gift that is specified in a will as "I leave my collection of baseball cards to my son" is a

The trustor is the

Assume that Bob Smith dies on May 25, 2011. Mr. Smith's assets include the following: ABC Stock costing $30,000 but valued at $40,000; a house costing $280,000 but valued at $620,000; life insurance in the amount of $600,000; and cash from various sources totaling $50,700. Three credit cards in Mr. Smith's name had balances totaling $8,530 on the date of death. The estate paid funeral and final medical expenses in the amount of $50,492. There were no charitable gifts designated by the will, and Mr. Smith was single at the time of his death. What is the amount of the taxable estate?

During the current year, an estate generates the following income amounts: Rental income $10,000, Interest income 4,000, Dividend income 6,000. The rental income is conveyed immediately to the beneficiary stated in the decedent's will. Dividends of $2,000 are donated to the decedent's church. What amount of federal income tax must be paid by the estate?

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 property of the estate.

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 interest of $5,000 that was earned on the bonds of the estate. Of this amount, $2,000 had been earned prior to death.

The estate of Bobbi Jones has the following provisions: total value of estate assets $2,000,000, amount specified to convey to a spouse $1,000,000, amount specified to convey to children $200,000, total debts 400,000, administrative expenses $50,000, and funeral expenses of $30,000. What is the value of the taxable estate?

What are the three goals of probate laws?

The terms of a will currently undergoing probate are: "A gift to my brother David of $25,000 cash; to my son James, $50,000 from my savings account; and to my Daughter Lila, all of my remaining property." At the time of death, the balance in the savings account was $40,000, and there was additional cash (after payment of funeral expenses and all claims against the estate) of $70,000. -The gift to James is a

What is meant by estate accounting?

A gift that is specified in a will as "I leave $5,000 in cash from my checking account to my daughter" is a

What is a remainderman of trust property?

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: Cash inflow: Rental income \ 78,000 Cash outflows: Insurance \ 5,200 Property taxes 7,800 Paving (considered an extraordinary repair) 5,600 Maintenance 10,400 Distribution to income beneficiary 39,000 Required: Prepare all required journal entries for this trust fund including the entry to create the trust.

A gift that is specified in a will as "I leave $5,000 in cash to my son" is a

Additional debts of $78,000 were discovered. Debts totaling $130,000 were paid. Prepare the journal entry to record the transaction.

What choices does an executor of an estate have in determining the values of assets included in the estate for tax purposes?

A demonstrative legacy is a

What is the amount of the personal exemption on an estate income tax return?

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 sales of the stocks and bonds for $120,000.