Hypothetical: Fred died on February 15, 2022. His personal representative is preparing his Form 706. On the date of his death, the FMV of his Gross Estate was valued at $20 million. Debbie was named personal representative. Steve paid all $20,000 of Fred's funeral expenses. Fred's last illness generated $30,000 in medical expenses. There were $300,000 in administrative expenses incurred. Fred owned a small vacation home in FL. It was appraised for $500,000 and that amount is included in the $20,000,000 Gross Estate amount. Due to hurricanes, insurance for the place was extremely expensive so Fred didn't insure it. Of course, a hurricane hit and destroyed the place 4 months after Fred died, reducing the value to $350,000 (most of the value is in the land and location, not the house. In addition to his medical expenses, Fred had some credit card and utility bills totaling $5,000 that were immediately paid out of the estate account by Debbie as personal representative. There were no claims from any creditors in the filed with filed in the probate estate. However, Debbie found a letter addressed to Fred in the mailbox from a woman who said that he owed her $300,000. She didn't provide a return a address. Nobody knows who the woman is, or where she lives. She said that if she didn't receive payment in full, she would file a lawsuit to collect the full amount as well as any interest on the debt to the extent allowed by law. Fred was not married at the time of his death. His will called for a distribution of $5,000,000 to the Curators of the University of Missouri to establish an endowment in your name to fund a faculty member to teach Estate Planning in the Agricultural Business Division of the College of Agriculture, Food and Natural Resources in honor of your invaluable advice to him as his financial planner. Assume there is no state estate tax imposed on Fred's estate. Using the abbreviated estate tax formulas (see Exhibits 6.7 and 6.8 of Chapter 6), compute Fred's taxable estate and show your computations to get full credit. Worth 5 points - the actual Taxable Estate figure is only worth 1 point, so you must show your computations as well to earn the other 4 points. Hypothetical: Fred died on February 15, 2022. His personal representative is preparing his Form 706. On the date of his death, the FMV of his Gross Estate was valued at $20 million. Debbie was named personal representative. Steve paid all $20,000 of Fred's funeral expenses. Fred's last illness generated $30,000 in medical expenses. There were $300,000 in administrative expenses incurred. Fred owned a small vacation home in FL. It was appraised for $500,000 and that amount is included in the $20,000,000 Gross Estate amount. Due to hurricanes, insurance for the place was extremely expensive so Fred didn't insure it. Of course, a hurricane hit and destroyed the place 4 months after Fred died, reducing the value to $350,000 (most of the value is in the land and location, not the house. In addition to his medical expenses, Fred had some credit card and utility bills totaling $5,000 that were immediately paid out of the estate account by Debbie as personal representative. There were no claims from any creditors in the filed with filed in the probate estate. However, Debbie found a letter addressed to Fred in the mailbox from a woman who said that he owed her $300,000. She didn't provide a return a address. Nobody knows who the woman is, or where she lives. She said that if she didn't receive payment in full, she would file a lawsuit to collect the full amount as well as any interest on the debt to the extent allowed by law. Fred was not married at the time of his death. His will called for a distribution of $5,000,000 to the Curators of the University of Missouri to establish an endowment in your name to fund a faculty member to teach Estate Planning in the Agricultural Business Division of the College of Agriculture, Food and Natural Resources in honor of your invaluable advice to him as his financial planner. Assume there is no state estate tax imposed on Fred's estate. Using the abbreviated estate tax formulas (see Exhibits 6.7 and 6.8 of Chapter 6), compute Fred's taxable estate and show your computations to get full credit. Worth 5 points - the actual Taxable Estate figure is only worth 1 point, so you must show your computations as well to earn the other 4 points
