Question

Bethany Johnson, a widow, died 5 years ago without leaving a will. Respond to the following questions and submit your answers in a Word Document to the Unit 3: Assignment Dropbox. Remember to review and reference the applicable sections of the Tax Code, including Publications 706 and 709. Differentiate between the various estates in property. Scenario: Bethany Johnson, a widow, died 5 years ago without leaving a will. 1. Which of the following items are included in Bethany’s gross estate? a. A life estate in a trust that pays Bethany $25,000 per year until she dies. b. A remainder interest in a trust worth $60,000 owned by Bethany. c. A one-half interest in investment land valued at $100,000 owned as joint tenants (Bethany and her brother) with right of survivorship. 2. In a 3-4 paragraphs (less than 500 words), prepare a sample will for Bethany to show the transfer of the assets above to Bethany’s son, Mike Johnson.

Answer 1

First of all let us understand what is an estate?

An estate consists of all of the property that a person leaves behind when he/she passes away.

The gross estate is the total fair market value of the assets a decedent owned at the time of death before making allowances for any adjustments or the payment of debts and taxes. This amount is important because it becomes the basis for determining estate taxes. Examples of assets included in the gross estate are:

• Cash and personal property
• Real estate
• Trusts and retirement accounts
• Life insurance
• Taxable death benefits from pensions and annuities

1) A person who dies without a will or with an invalid will is said to have died intestate.

The property of a person who dies intestate is generally distributed according to the laws of the state of residence and is subject to the Federal estate tax.

Following items are to be included in the Gross estate of Bethany Johnson:-

a. A life estate in a trust that pays Bethany $25,000 per year until she dies. - To be included in the gross estate.

b. A remainder interest in a trust worth $60,000 owned by Bethany - To be included in the gross estate.

c. c. A one-half interest in investment land valued at $100,000 owned as joint tenants (Bethany and her brother) with right of survivorship.- To be included in gross estate.

2) 2. In a 3-4 paragraphs (less than 500 words), prepare a sample will for Bethany to show the transfer of the assets above to Bethany’s son, Mike Johnson.

I, Bethany Johnson, residing at any place, any town, any state, declare this to be my Will.

I direct my executors to pay my enforceable unsecured debts and funeral expenses, the expenses of my last illness, and the expenses of administering my estate.

I give all my tangible personal property and all policies and proceeds of insurance covering such property, to my son, Mike Johnson.

I give all my residences, subject to any mortgages or encumbrances thereon, and all policies and proceeds of insurance covering such property, to my son, Mike Johnson.

I have signed this will this ____ day of ____, 20___ .

___________________
(legal signature)

SIGNED AND DECLARED by any person on______ to be her will, in our presence, who at her request, in her presence and in the presence of each other, all being present at the same time, have signed our names as witnesses.

___________________
(signature)

Blair Witness

___________________

___________________
Address

___________________
(signature)

I. Witness

___________________

___________________
Address

Self-Proving Affidavit

STATE OF _____________

COUNTY OF _____________