!Required information[The following information applies to the questions displayed below.]Tom Hruise was an entertainment executive who had a fatal accident on a film set. Tom's will directed his executor todistribute his cash and stock to his spouse, Kaffie, and the real estate to a church, The First Church of Methodology. Theremainder of Tom's assets were to be placed in trust for three children. Tom's estate consisted of the following:Assets:Personal assetsCash and stockIntangible assets (film rights)Real estateLiabilities:MortgageOther liabilities$ 1,580,00025,800,00080,500,00016,800,000$ 124,680,000$ 5,000,0005,900,000$ 10,900,000a. Tom made a taxable gift of $6.90 million in 2011. Compute the estate tax for Tom's estate. (Refer to Exhibit 25-1 and Exhibit 25-2.)Note: Enter your answers in dollars, not millions of dollars.Estate Tax Due

Step 1:1. Calculate the taxable estate:Gross estate=total assets -total…

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Administration Of Wills/Trusts/ And Estates

5th Edition

ISBN:9781285281308

Author:Brown

Publisher:Brown

Chapter13: Estate Taxes

Section: Chapter Questions

Problem 1CTD

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After the death of Lennie Pope, his will was read. It contained the following provisions:∙ $110,000 in cash goes to decedent’s brother, Ned Pope.∙ Residence and other personal property go to his sister, Sue Pope.∙ Proceeds from the sale of Ford stock go to uncle, Harwood Pope.∙ $300,000 goes into a charitable remainder trust.∙ All other estate assets are to be liquidated with the cash going to Victoria Jones.a. Prepare journal entries for the following transactions that subsequently occur:(1) Discovered the following assets (at fair value): Cash . . . . . . . . . . . . . . . . . . . . $ 19,000Certificates of deposit .. . . . . .90,000Dividends receivable . . . . . . . . . 3,000Life insurance policy . . . . . . . . 450,000Residence and personal effects . . . . . . . . . . . . . . . . 470,000Shares of Ford Motor Company . . . . . . . . . . . . . . . . 72,000Shares of Xerox Corporation . . . . . . . . . . . . . . . . . . . 97,000 (2) Collected life insurance policy.(3) Collected dividends…
Cora, 79, has an estate that includes her personal residence valued at $120,000 and $18,000 in a bank account that is solely in her name. She would like to arrange her estate so that she maintains exclusive control of the assets during her lifetime, but at her death the assets will pass to her friend, Mabel, outside of probate. Based on Cora's goals and situation, which of the following are correct statements about will substitutes that she could use? She should put her bank account in tenancy in common with Mabel. She should title her personal residence in joint tenancy with her friend, Mabel. She should execute a will that names her friend, Mabel, as the legatee of the bank account and the devisee of the personal residence. She should place the bank funds in a payable on death (POD) account with Mabel as beneficiary. She should change the title on her personal residence to indicate a life estate reserved for her lifetime and a remainder to her friend, Mabel. A)IV and V…
Roger Kramer’s wife Sarah passed away five years ago, and she made Roger promise to continue to provide care for Sarah’s sister Margaret Smith and let her live in their residence for a period of time. Roger and Sarah had no children, and Margaret Smith was like a daughter to them. Roger passed away, and his will contained the following provisions:a. $200,000 of estate principal should be donated to the Sierra Club and the balance, less appropriate expenses, should be placed in theMargaret Smith trust.b. The Margaret Smith trust calls for 80% of periodic net income to be paid out to Margaret Smith with the balance to be considered trust corpus.c. The trust is to be terminated two years after Roger’s death at which time 60% of the corpus will be given to Margaret Smith and the balance to the Milwaukee Foundation to be placed in a fund to support environmental issues dealing with alternative energy sources.The following events occurred within one year of Roger’s death:1. In addition to…
The Jeffersons want to establish a trust to provide for their children in case of their premature deaths. Which of the following is most appropriate for the Jeffersons' overall situation and objectives (objectives are Capital accumulation is a primary concern in this stage of their lives. The protection of principal, income production, and reduction of taxes are of minor importance)? They have a net worth of $725,000 Provide a rationale for your answer. Choose one of the following an irrevocable life insurance trust granting Crummey powers to the children a grantor retained income trust (GRIT) with their children, Ashanti and Blake named as beneficiaries a revocable living trust naming a third party as successor trustee, with Avery and Jaylen as the primary beneficiaries while living and the children listed as remainder beneficiaries an irrevocable living trust naming the children as beneficiaries and Jaylen and Avery as the trustees
Donna Stober’s estate has the following assets (all figures approximate fair value): The house, cash, and other assets are left to the decedent’s spouse. The investment land is contributed to a charitable organization. The automobiles are to be given to the decedent’s brother. The investments in stocks and bonds are to be put into a trust fund. The income generated by this trust will go to the decedent’s spouse annually until all of the couple’s children have reached the age of 25. At that time, the trust will be divided evenly among the children. The following amounts are paid prior to distribution and settlement of the estate: funeral expenses of $20,000 and estate administration expenses of $10,000. What value is to be reported as the taxable estate for federal estate tax purposes?
Montgomery has decided to engage in wealth planning and has listed the value of his assets below. The life insurance has a cash surrender value of $154,000, and the proceeds are payable to Montgomery’s estate. The Walen Trust is an irrevocable trust created by Montgomery’s brother 10 years ago and contains assets currently valued at $800,000. The income from the trust is payable to Montgomery’s faithful butler, Walen, for his life, and the remainder is payable to Montgomery or his estate. Walen is currently 37 years old, and the §7520 interest rate is currently 5.4 percent. Montgomery is unmarried and plans to leave all his assets to his surviving relatives. (Refer to Exhibit 25-1, Exhibit 25-2 and Exhibit 25-4.) Property Value Adjusted Basis Auto $ 37,000 $ 72,000 Personal effects 92,000 127,000 Checking and savings accounts 284,000 284,000 Investments 2,585,000 855,000 Residence 1,485,000 1,065,000 Life insurance proceeds 1,085,000 84,000 Real estate investments…
Your client, age 65, has a gross estate valued at $300,000. His wife, age 58, has a gross estate valued at $150,000 and is financially competent. His objectives are to: leave all property to his wife in as simple a manner as possible; allow his wife to determine the ultimate beneficiaries of all his property; and make maximum use of the unlimited marital deduction. Which one of the following transfers is most appropriate for achieving the client's objectives? A)An estate trust with his wife as beneficiary B)Life income to his wife from a trust funded with the exemption equivalent amount, with the remainder to his designated beneficiaries C)A combination qualified terminable interest property (QTIP) trust and family bypass trust with his wife as income beneficiary D)An outright bequest of the entire estate to his wife
Donna Stober's estate has the following assets (all figure approximate fair value): Investments in stocks and bonds $1,552000 House 756,000 Cash 74,900 Investment land 60,800 Automobiles (three rare vehicles) 59,000 Other assets 108,000 The house, cash, and other assets are left to the decendent's spouse. The investment land is contributed to a charitable organization. The automobiles are to be given to the decendent's brother . The investments in stocks and bonds are to be put into a turst fund. The income generated by this trust will go to the decendent's spouse annually until all of the couple's children have reached the age of 25. At that time, the…
Charles Kamp, a divorced person, died in February of the current year with an estate consisting of assets valued at $7,008,000 and liabilities of $380,000. Charles’s will contained the following provisions:a. Robert Sullivan would serve as executor of the estate and trustee for the Kamp Children Trust.b. Timberland with a market value of $560,000 would be placed in a charitable remainder trust. The income from the trust would accrue to the benefit of his sister Marsha Kamp Rodriquez. Income would be reduced by the depletion charge associated with the number of board feet of lumber harvested.c. Securities with a value of $25,000 would be given to the Milwaukee Art Museum, recognized as a charitable organization.d. Securities with a value of $600,000 would be given to his married daughter, Maria Kamp Wilson.e. Each of his three best hunting friends would be paid $200,000 from the proceeds of the sale of Charles’s investment in hunting land in Alaska. The hunting land was valued at…
Mr. Manuu left P 12,000,000 worth of properties distributable to his three (3) legitimate children and legitimate wife and one (1) illegitimate child. Upon his death, he left a will assigning P 3,000,000 for his illegitimate child and the balance for the free portion will be given to the local church. Considering he left a will, how much of the free portion is to be received by the church?
The will of Josh O’Brien has the following stipulations:Antique collection goes to Ilsa Lunn.All money in the First Savings Bank goes to Richard Blaine.Cash of $9,000 goes to Nelson Tucker.All remaining assets are put into a trust fund with the income going to Lucy Van Jones. At her death, the principal is to be conveyed to Howard Amadeus.Identify the following:a. Remaindermanb. Trustorc. Demonstrative legacyd. General legacye. Specific legacyf. Life tenantg. Testator
A married couple have written a will that leaves part of their money to a trust fund. The income from this trust will benefit the surviving spouse until death, with the principal then going to their children. Why was the trust fund created? To reduce the estate of the surviving spouse and, thus, decrease the total amount of estate taxes to be paid by the couple. To ensure that the surviving spouse is protected from lawsuits filed by the couple’s children. To give the surviving spouse discretion over the ultimate use of these funds. To maximize the earning potential of the money because trust funds generate more income than other investments.

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