Question

Shawn and Amy were college sweethearts and had been married for 20 wonderful years. They lived in Denver, Colorado. Shawn was one of three partners with the OMG! Engineering firm. Unfortunately, Shawn, a serious mountain climber, ran out of oxygen as he tried to reach the top of Mount Everest. Amy was devastated when she learned of his death and had no clue what to do next. Her friend was concerned when Amy told her they never got around to preparing their wills. Her friend suggested Amy go see an attorney. Shawn and Amy had accumulated all their assets after they were married. At the time of Shawn’s death, they had the following assets:

• Home owned jointly with rights of survivorship with his wife Amy, valued at $800,000. Purchased with Shawn’s earnings.
• Stock account in his individual name, valued at $250,000. Purchased with Shawn’s earnings.
• Interest bearing Checking account in Shawn’s name valued at $80,000
• Interest bearing Checking account in Amy’s name valued at $ 100,000
• Life estate received from his mother, Judy, in a family vacation home. The home is worth $1,000,000. Shawn’s sister Toby is the remainder beneficiary.
• Life Insurance on Shawn’s life $1,000,000 (owned by Shawn)
• Shawn’s interest in the OMG! Engineering firm $1,500,000.
• Amy is the sole beneficiary (both current and remainder) of an irrevocable trust valued at $3,000,000. She currently gets the income yearly. Trust will terminate when she turns 50.

As it pertains to the above scenario, answer the following questions:

1. List the assets and value that will be included in Shawn’s gross estate and the heir’s new basis.
2. List the assets that will be subject to probate at Shawn’s death. In general, what happens to his assets that are not subject to probate?
3. Can Shawn, under his will, designate who is to receive the family vacation home? Explain.
4. If they had moved to Texas right before he died,
   1. How would your answer to #1 change as it relates to the Home and Stock account? Explain.
   2. Would the income interest from Shawn’s checking account be his separate income or their community income?
5. If they had moved to California right before he died,
   1. How would your answer to #1 change as it relates to the Home and Stock account? Explain.
   2. Would the income interest from Shawn’s checking account be his separate income or their community income?
6. You are a CPA who is very knowledgeable about the area of wealth, transfer, trusts and estates.   If Shawn had not died and he and Amy had come to you, as a result of a referral from one of your satisfied clients, explain one thing you would recommend as a property transfer method that would be appropriate for their situation? They heard probate was expensive, so they would like to avoid it if at all possible. In answering this question, assume they live in Denver, Colorado.

Answer 1

Answer :

In deep perception we can go with CPA standards that properties of which Shawn is sole holder will go to his wife even though there isn't any will written by him. The heriditary property which Shawn recieved from Judy, if it was completely owned by Shawn will be Amy's even though there is no will, if it was jointly held by Shawn and Toby, in that case Toby can claim the whole property .Stock account held by shawn will be reciveable /transferable by Amy..