Reference no: EM13950469
Recording activities for an estate and a trust. At the time of Robert Granger's death, his estate consisted of the following assets and liabilities measured at fair market value:
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Assets
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Cash
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$ 50,000
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Personal residence .
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450,000
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Automobile and sailboat .
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65,000
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Investment in mutual funds
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3,280,000
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Collection of antique duck decoys. .
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85,000
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Death bene?t of life insurance policy. .
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500,000
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Farmland in Ozaukee County .
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800,000
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Total assets. .
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$5,230,000
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Liabilities
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Mortgage on personal residence
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$ 150,000
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Insurance policy loan .
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50,000
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Credit card balances
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5,000
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Total liabilities .
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$ 205,000
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The following information is relevant to the administration of Robert's estate:
a. Robert is a single person and has two minor children from a previous marriage. After satisfying the other provisions of his will, the balance of Robert's estate is to be transferred to a trust for the bene?t of his minor children. Annual trust income in the amount of $15,000 is to be transferred to the children. Upon attaining the age of 21, each child would receive corpus of $25,000. The remaining corpus of the trust and any undistributed income is to be paid out to the children when they both have attained the age of 25.
b. Title to the personal residence, subject to the mortgage, will be transferred to Robert's sister who is to serve as the guardian for his minor children.
c. The collection of antique duck decoys is to be given to Ducks Unlimited which is a qualifying charitable organization.
d. Robert's sailboat, valued at $35,000, is to be given as a charitable contribution to the Milwaukee Community Sailing Center. The automobile will be given to his nephew Roger Stevens.
e. Funeral and administrative expenses of the estate are $25,000.
f. Investments in mutual funds with an estate value of $170,000 were sold for $180,000 to provide necessary liquidity.
Subsequent to the settlement of Robert's estate, the following activity occurred in the children's trust during the ?rst month:
a. The farmland was rented for $25,000. Property taxes and other operating expenses associated with the farmland were incurred in the amount of $8,000.
b. Mutual funds with an estate value of $120,000 were sold for $132,000. Mutual funds with an estate value of $50,000 were sold for $45,000.
c. Income on the mutual fund investments was $22,000.
d. The trustee made a payment of corpus to Robert's daughter upon her turning 21 years of age.
e. After distributing the required amount of trust income, all available cash with the exception of $5,000 of income cash was invested in mutual funds.
Prepare all necessary entries to record the activities of the estate and the trust. Uni?ed transfer tax rates and the 2009 exclusion amount as set forth in the text should be used.
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