PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN: 9781337117005
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
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Question
Chapter 15, Problem 6FPE
Summary Introduction
To discuss: The way trusts uses as a part of estate planning and suggest some of ideas to consider them in preparing will.
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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…
Natalie Bryan, a single adult who lives at 425 Flathead Way, Kalispell, Montana 59901, has three adult children (Daniel Bryan, Amanda Green, and Samantha Cruz). During the year, Natalie makes the following gifts to the children: To Daniel. Office building, I Helena acquired in 2011 at a cost of $900,000, current value $1,900,000.
To Amanda. Rental cabins in Whitefish inherited in 2009 (value $1,000,000) from her father, current value $1,800,000.
To Samantha. Vacation lodge on Flathead Lake acquired in 2015 at a cost of $800,000, current value $1,900,000.
Requirements:
Prepare 2022 gift tax return (Form 709) for Natalie (Social Security number 112-45-6787) to compute the total taxable gifts (line 3) for her; stop with line 3 of page 1, but complete page 2 and 3 of the return. Natalie made no taxable gifts in prior years.
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?
Chapter 15 Solutions
PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
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