Cody and Reese were married years ago and had one child, Amber. Cody and his longtime friend, Kandi, were recently flying in Kandis new plane. For a brief period Kandi was distracted and lost control of the plane. Unfortunately, the plane crashed and Kandi died instantly and Cody died a few days later as a result of the injuries sustained during the crash. When Cody died he and Reese owned the following property:

Home valued at $1,000,000 held tenancy by the entirety.

Car 1 valued at $15,000 held fee simple by Cody.

Car 2 valued at $20,000 held Joint Tenancy with Rights of Survivorship by Cody and Amber.

Inherited diamond ring collection valued at $3,000,000 held fee simple by Reese.

Boat valued at $500,000 held tenancy in common by Cody and Amber.

Life Insurance Policy 1 on Reeses life, owned by Cody. The fair market value of the policy was $100,000 and the death benefit was $200,000. The beneficiary is Amber.

Life Insurance Policy 2 on Codys life, owned by Cody. The fair market value of the policy was $80,000 and the death benefit was $600,000. The only beneficiary is Kandi.

IRA account valued at $2,500,000 owned by Cody with Amber as the beneficiary.

Irrevocable Trust by Cody for the benefit of Amber created five years ago. The trust is valued at $400,000, and Amber is the beneficiary at Codys death.

Questions:

Assuming Cody and Reese have lived in California, a community property state, for all their married working lives. Which of their assets are community property?

home

life insurance policy on Reese (Cody beneficiary)

Codys IRA (Reese is beneficiary)

$100,000 in a CD owned by Reese

Car owned by Cody only

All of the above

I, II, III, V

I, III, V

I, V

I

Which of the assets are subject to probate if Cody dies?

All of the above

I, IV, V

IV, V

V

Which of the following techniques can be used to avoid ancillary probate for a real estate investment in a state other than that of the decedents residence?

JTWROS

Revocable living trust

Tenant in common

A deed delivered to an escrow agent

Testamentary trust

I, II, III, V

I, II, IV

I, IV

II, III, IV

III, V

Assuming that Cody and Reese have been buying stock in an account for years. Their basis is $500,000. The stock is now worth $1,000,000. If either of them dies, what will be the survivors basis?

$0

$250,000

$500,000

$750,000

$1,000,000

Cody and Kandi paid $100,000 for a vacation home held in JTWROS. Cody put up $75,000, and Kandi put up $25,000. When Kandi dies, how much will the IRS try to include in his gross estate?

$0

$25,000

$50,000

$75,000

$100,000