Question 3 Amanda and Rodger are married out of community of property with the inclusion of the accrual system. They have two children, Abigail and Isabella, who are both at university, and they thought it would be appropriate to revisit their Last Will and Testament with guidance from their estate analysis. The couple would like to leave all their assets and belongings to their children in equal shares, should they pass away simultaneously. Rodger has asked that you first prepare his estate analysis. He would like to include in his estate a specific cash bequest of R100 000 to each child, and his gold coins in equal shares to Amanda and the two children, which are to be registered in each of their personal names on his death. The remainder of his estate he leaves to his children in equal shares. Their executor charges the maximum fee plus VAT. The couple were married on 2 June 1989. At the time, Rodger's estate was worth R10 000 and Amanda's was worth R50 000. The Consumer Price Index (CPI) headline index number at the date of marriage was 40.0, and at death can be assumed at 124.0. The couple's assets and liabilities: Asset Flat in Strand Market value R1 250 000 Base cost Owner R1 000 000 Rodger Notes Bond of R400 000 Bond of R5 000 See Note 1 Flat in Durban R 850 000 R1 200 000 R600 000 Amanda R 750 000 Rodger Gold coins See Note 2 Unit trust Motor vehicle Motor vehicle Call account Fixed deposit Tax free savings account Paintings R 400 000 R300 000 R200 000 R200 000 R 50 000 R 100 000 See Note 3 R 100 000 Rodger R350 000 Rodger R 280 000 Amanda R200 000 Amanda R 50 000 Rodger R 80 000 Rodger See Note 4 R 700 000 R 50 000 Amanda See Note 5 Life policy 1 R4 000 000 Life policy 2 R3 000 000 Amanda, Nominated who is also beneficiary: the life Rodger assured. Rodger, Nominated who is also beneficiaries: 50% to estate assured. 50% to Amanda See Note 6 Amanda. Nominated Rodger is beneficiaries: the life 25% to Abigail assured. 25% to Isabella the life Life policy 3 Life policy 4 R 500 000 R 750 000 Notes: 1. 2. 3. Rodger would like to request in his Will that these are not sold but bequeathed in equal shares to his wife and children on his death. The unit trust investment is in pure equity funds. Amanda transferred these funds from her savings account to her call account. This money is intended to cover any emergency expenses the couple might have. Rodger reinvested the funds in a three-month fixed deposit. Amanda inherited the paintings from her grandfather in 1991; these were recently revalued. Rodger took out this policy on the life of his mother. Should she pass away, he will use the policy proceeds to assist his dad in covering his mother's funeral costs. The policy has a cash value of R57 000. 4. 5. 6. The couple estimate their funeral costs to be R50 000 each, and their capital gains tax payable to be R250 000 each. Perform the following calculations, assuming that Rodger passes away today. Show all your calculations and reasoning. 3.1 Calculate the accrual claim. 3.2 Calculate the estate duty payable. 3.3 Conduct a liquidity analysis and comment on the result. Question 3 Amanda and Rodger are married out of community of property with the inclusion of the accrual system. They have two children, Abigail and Isabella, who are both at university, and they thought it would be appropriate to revisit their Last Will and Testament with guidance from their estate analysis. The couple would like to leave all their assets and belongings to their children in equal shares, should they pass away simultaneously. Rodger has asked that you first prepare his estate analysis. He would like to include in his estate a specific cash bequest of R100 000 to each child, and his gold coins in equal shares to Amanda and the two children, which are to be registered in each of their personal names on his death. The remainder of his estate he leaves to his children in equal shares. Their executor charges the maximum fee plus VAT. The couple were married on 2 June 1989. At the time, Rodger's estate was worth R10 000 and Amanda's was worth R50 000. The Consumer Price Index (CPI) headline index number at the date of marriage was 40.0, and at death can be assumed at 124.0. The couple's assets and liabilities: Asset Flat in Strand Market value R1 250 000 Base cost Owner R1 000 000 Rodger Notes Bond of R400 000 Bond of R5 000 See Note 1 Flat in Durban R 850 000 R1 200 000 R600 000 Amanda R 750 000 Rodger Gold coins See Note 2 Unit trust Motor vehicle Motor vehicle Call account Fixed deposit Tax free savings account Paintings R 400 000 R300 000 R200 000 R200 000 R 50 000 R 100 000 See Note 3 R 100 000 Rodger R350 000 Rodger R 280 000 Amanda R200 000 Amanda R 50 000 Rodger R 80 000 Rodger See Note 4 R 700 000 R 50 000 Amanda See Note 5 Life policy 1 R4 000 000 Life policy 2 R3 000 000 Amanda, Nominated who is also beneficiary: the life Rodger assured. Rodger, Nominated who is also beneficiaries: 50% to estate assured. 50% to Amanda See Note 6 Amanda. Nominated Rodger is beneficiaries: the life 25% to Abigail assured. 25% to Isabella the life Life policy 3 Life policy 4 R 500 000 R 750 000 Notes: 1. 2. 3. Rodger would like to request in his Will that these are not sold but bequeathed in equal shares to his wife and children on his death. The unit trust investment is in pure equity funds. Amanda transferred these funds from her savings account to her call account. This money is intended to cover any emergency expenses the couple might have. Rodger reinvested the funds in a three-month fixed deposit. Amanda inherited the paintings from her grandfather in 1991; these were recently revalued. Rodger took out this policy on the life of his mother. Should she pass away, he will use the policy proceeds to assist his dad in covering his mother's funeral costs. The policy has a cash value of R57 000. 4. 5. 6. The couple estimate their funeral costs to be R50 000 each, and their capital gains tax payable to be R250 000 each. Perform the following calculations, assuming that Rodger passes away today. Show all your calculations and reasoning. 3.1 Calculate the accrual claim. 3.2 Calculate the estate duty payable. 3.3 Conduct a liquidity analysis and comment on the result