Probate Fact Pattern #1 Tom and Rita have been married for 19 years. Tom has recently been diagnosed with a malignant brain tumor. His prognosis is very poor - survival beyond 18 months is unlikely. Rita is in good health. They have the following children: CHILDREN AGES Colin 14 Elizabeth 9 Chet 6

Their children are healthy and attend school. Tom and Rita own a film production company called Playtone. Tom and Rita want to leave Playtone to their children. The following represents table Tom and Ritas current financial position. ASSETS LIABILITIES AND NET WORTH Cash/Cash Equivalents Liabilities JTROS Cash $ 460,000 Current Liabilies Total Cash/Cash Equivalents $ 460,000 W Credit Card 1 $ 148,000 W Credit Card 2 $ 22,000 Invested Assets H Credit Card 3 $ 95,000 CP Playtone $ 24,500,000 CP Credit Card 4 $ 26,000 H Inherited Stock Portfolio $ 2,650,000 Total Current Liabilities $ 291,000 TC Quarterhorses $ 780,000 W Inherited Stock Portfolio $ 2,250,000 Long-Term Liabilities Total Investments $ 30,180,000 CP Mortgage - Primary $ 1,210,000 H Mortgage - Lake House $ 1,140,000 Personal Use Assets CP Loan - Boat $ 160,000 CP Primary Residence $ 3,420,000 H Loan - Auto 3 $ 25,000 H Lake House $ 2,280,000 Total Long-Term Liabilities $ 2,535,000 CP Boat $ 380,000 CP Auto 1 $ 170,000 Total Liabilities $ 2,826,000 W Auto 2 $ 94,000 H Auto 3 $ 90,000 Total Personal Use $ 6,434,000 Net Worth $ 34,248,000 Total Assets $ 37,074,000 Total Liabilities and Net Worth $ 37,074,000

Notes to Financial Statements:

1. Assets are stated at fair market value (rounded to even dollars).

2. Liabilities are stated at principal only (rounded to even dollars).

3. The adjusted basis of Playtone is $3,000,000.

4. Inherited Stock Portfolios have children designated as beneficiaries.

5. Property Ownership: a. JTROS Joint tenancy with right of survivorship (Tom and Rita are joint tenants of all property JTROS). b. TC tenants in common (assume Tom and Rita are 50/50 tenants in common unless question says otherwise. c. CP community property of Tom and Rita d. H Toms separate property. e. W Ritas separate property.

Question 32: Assume that Tom dies December 31, 2020. Calculate the total value of the Toms assets.

Question 33: Assume that Tom dies on December 31, 2020. Calculate the value of assets that will pass through Toms probate estate.

Question 34: Why are the answers to questions 32 and 33 different? Explain.