Question

Morris Buttermaker is a baseball coach and owns the following assets:

1.       A $1,000,000 life insurance policy on his own life, no beneficiary is named.

2.       $125,000 in an IRA account naming his nemesis baseball coach Roy Turner as beneficiary and a baseball pitcher Amanda Whurlizer as contingent beneficiary.

3.       $100,000 in bank account titled jointly with his girlfriend Joyce. Both Morris and Joyce contributed equally to the account.

4.       A 1/3 interest in a beach house owned as tenants in common with Morris’s sister Phyllis. The FMV of the beach house is $300,000.

5.       A life estate in a home (where he currently lives) given to him by his father Ben. Morris’s brother Jose holds the remainder interest. The house has a FMV of $250,000.

6.       A solely-owned time-share for a week’s stay at Sundance Ski Resort in Utah every year. The FMV of the time-share is $15,000

Morris has 2 adult children: Tanner who has two children (Morris’s grandchildren) and Ahmad who has four children (Morris’s grandchildren). Morris executes a will naming his friend Jimmy as executor and the will contains the following bequests:

1.       A specific bequest leaving his home to his son Tanner.

2.       A specific bequest leaving the time-share to his girlfriend Joyce.

3.       A general bequest that leaves $500,000 “to my children that survive me, or if a child has predeceased me, to his issue”   

4.       There are no residuals bequests.

Morris executes a will because someone has been murdering baseball coaches in the area recently. From the most recent murder of Roy Turner (Buttermaker’s nemesis) the Police learn a crazed parent is murdering little league championship coaches. Before the police can arrest the suspect, the suspect confronts Ahmad and Morris. Ahmad is killed in the encounter as he tries to protect Morris. Morris then flees and dies of a heart attack from the emotional stress and physical exertion.

Amanda Whurlizer, shocked by the deaths of her friends, worries about her mental stability. Since there is also a history of dementia that runs in her family, she fears that she will eventually lose her mind. She has read on the internet about durable powers of attorney, health care proxies, and living wills. She is confused about the differences between these documents and comes to you for advice and clarification.

Questions:

1.       What is the first thing Jimmy has to do to probate Morris’s will? (1 point)

2.       What is the size (in terms of dollars) of Morris’s probate estate? (please show work) (3 points)

3.       What is the size (in terms of dollars) of Morris’s gross estate? (please show work) (3 points)

4.       Will Jimmy have sufficient amount of assets to probate the estate assuming taxes, debts and expenses total $100,000? (1 point)

5.       After Jimmy has assembled the assets and paid the taxes, debts and expenses he can then distribute assets to Morris’s heirs. How will the house be distributed? (2 points)

6.       Who will receive the IRA account (1 point)?

7.       How will Jimmy distribute Morris’s general bequest of $500,000 to Morris’s children and grand-children assuming it is left to them “per stirpes” (please show work)? (3 points)

8.       How will Jimmy distribute Morris’s general bequest of $500,000 to Morris’s children and grand-children assuming it is left to them “per capita” (please show work)? (3 points)

9.       If Joyce does not want to take possession of the time-share left to her by Morris, where will the time-share go? (2 points)

10.   If we assume that Morris had no taxes, debts and expenses, what is the size of the residual estate? (3 points)

11.   How will the residual estate be distributed? (2 points)

12.   Amanda is confused about the different durable powers of attorney. She asks you what is the difference between a durable power of attorney and a springing durable power of attorney? What do you tell her? (3 points)

13.   She is also confused about the difference between a health care proxy and living will. What is the difference between the two? (3 points)

Answer 1

1. Jimmy, being an executor of the Morris’s will, will have to explain every aspect of the will to Amanda Whurlizer, and have to ascertain the parts of Morris’s property to be distributed to the “as mentioned’ beneficiaries in the will.

2. Calculation of Morris’s Probate estate:

1/3rd interest in a house of Morris’s sister Phyllis, $300,000/3	$100,000
House, he is living in	$250,000
Time-Share	$15,000
Morris’s total probate estate	$365,000

3. Calculation of Morris’s Gross estate:

               

Life Insurance Policy	$1,000,000
IRA Account	$125,000
Bank Account$100,000/2 (Morris’s share in Joint Bank Account.)	$50,000
1/3rd interest in a house of Morris’s sister Phyllis, $300,000/3	$100,000
House, he is living in	$250,000
Time-Share	$15,000
Morris’s total probate estate	$1,540,000

4. Yes. Jimmy will be left with sufficient amount of assets to probate the estate assuming taxes, debts and expenses total $100,000.

5. As per the bequest, the house of Morris’s will be given to his son Tanner.

6. Amanda Whurlizer, will get the IRA account.

7. As per the bequest, Morris leaves $500,000 “to my children that survive me, or if a child has predeceased me, to his issue.” That means the child entitled to $500,000 is Ahmed or Ahmed’s 4 children only.

Therefore $500,000 will be divided by four. That gives $125,000 to each of Morris’s Grandchildren.

8. As per the bequest, Morris leaves $500,000 “to my children that survive me, or if a child has predeceased me, to his issue.” That means the child entitled to $500,000 is Ahmed or Ahmed’s 4 children only.

Therefore $500,000 will be divided by four. That gives $125,000 to each of Morris’s Grandchildren.

Note: Here, in this case, there will be no difference in ‘Per Stripe’ and ‘Per Capita’ Method, as there is only one immediate beneficiary in the deceased property.

9. If Joyce does not want to take possession of the time-share left to her by Morris, the time-share will go to Morris’s immediate beneficiary that is his living son Tarren.

11. All the residual estate, if any, would be distributed to Morris’s immediate beneficiary that is his living son Tarren.

12. A springing power of attorney is called that as it “springs” into action if you become incapacitated.

Durable power of attorney becomes effective as soon as you sign the document, and continues to be effective if you are incapacitated.

13. Both, ‘health care proxy’ and ‘living will’, are the legal documents entitling someone to take a medical decision on your behalf, if you are not in the state to take a decision. But the difference is 'living will' is made willfully for the case may arise and 'health Care Proxy' is assigned when the need arises.