Copy of MOCK EXAM DEATH OF ALAN

Should Alan die before Ben, would your analyses take into account total joint liabilities and liquidity or, would it be preferable to deal with only half the liabilities and liquidity in Alan’s deceased estate. Choose the most accurate statement:

Assume that Alan dies first and that the capital gain tax calculated for estate duty purposes is R 1 245 600. 

Assume further that: Funeral costs of R70 000 and Administration costs of R50 000.

To answer this question as accurately as possible, you would be required to calculate the Master fees as well as the executor fees that are applicable.

The total joint liabilities in Alan’s deceased estate amount to:  Select the correct statement:

Complete the statement below:

In the event that Alan dies first, the life insurance policy on Alan’s life for the purpose of the buy and sell with Sharon, will be included in his estate duty calculation at an amount of:

Match the statements below assuming that Alan dies first:

In the event that Alan dies first and, taking into account the provisions in his Will, the value of the farm that is to be included in the capital gain tax calculation is: Choose the correct amount:

The value of the business Pretty Shoes, which is included in the estate duty calculation in the event the Alan dies first is

The following costs and liabilities form part of the joint estate. Select the correct statements:

1.    Funeral costs

2.    Administration costs

3.    Executor fees on the total joint and not joint assets

4.    Executor fees on the total joint estate

5.    Both Alan and Ben’s liabilities

6.    Ben’s liabilities alone

7.    The total capital gain tax liability as a result of assets that are disposed of on both joint and not joint

8.    The capital gain tax liability on only the joint assets that were disposed of

The value of the farm equipment will be included in the estate duty calculation as well and in the capital gain calculation at a value of:

In the event that Alan dies first, the residue amount to Ben is calculated as follows:

Net estate                                R21 422 728

less bone fide farm               R7 000 000

Less farm equipment           R3 500 000

Less unapproved cover        R1 800 000

Less cash bequest                R2 000 000

Less member interest         R5 840 000

Residue for 4q                      R1 282 728

Assume that your net value and section 4q deduction matches above, is the calculation used to determine residue, accurately calculated.

In the event that Alan dies first and, we assume that there is not enough liquidity in the deceased estate and that, the executor has to commence the process of selling assets and / or cashing in investment, indicate, in descending order, the process that the executor should follow:

[first step being your first selection]

The vested assets of R4 000 000 in the Forever Together Trust, in the event that Alan dies, will be treated as follows:

Select the correct statement/s below:

1.    Is estate dutiable

2.    Is not estate dutiable

3.    Falls into the residue that devolves on Ben

4.    Does not fall into the residue that devolves on Ben

The executor has an option to decide on whether his executor fees of  3.5% will be applied to the full farm value of R10 000 000 of R7 000 000 and,

and the executor has the right to charge a 6% fee on any income that flows into the deceased estate after the death of the deceased.

Choose the correct statement: