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Noah D. Canby died on May 9, 2012, as a result of a boating mishap




Question;Noah D. Canby died on May 9, 2012, as a;result of a boating mishap. He is survived by his adult children: Isabella and;Benjamin. At the time of his death, Noah lived at 13410;Memorial Drive, Houston, Texas 77079. Noah was;predeceased by his wife, Olivia, who died in 2008. Details regarding Noah?s;estate are summarized below.;? At the time of his death, Noah owned two;whole life policies issued by Peacock Insurance;Company. Each policy has a maturity value of;$200,000 and lists Isabella and;Benjamin as the beneficiaries.;? Noah was a participant in his employer?s;contributory qualified pension plan. As of May 9, 2012, the balance in his;account is found to be;Employer?s contribution $800,000;Noah?s contribution 800,000;Income earned by the plan 400,000;Because Noah failed to designate a new;beneficiary after his wife died, the plan proceeds of $2,000,000 are paid to;his estate on July 23, 2012.;? As an investment, Noah and his wife had;purchased a tract of land near Plano (TX) in 2002. They paid $200,000 for the;property and listed ownership as ?Noah and Olivia;Canby, tenants by the entirety with right of;survivorship.? The Plano property is worth $600,000 on May 9, 2012.;? The purchase of the Plano property (see;previous item) was partly financed with mortgage funds provided by Plano Trust;Company. As of May 9, 2012, the mortgage has a balance due of $101,000;(including accrued interest).;? In 2009, Noah and his daughter purchased;grazing land in Bexar County with title being listed as ?Noah and Isabella;Canby as equal joint tenants with right of survivorship.?;The land is near San Antonio and was;considered to have future potential for residential development. Of the;$400,000 purchase price, Noah furnished $100,000 and Isabella provided $300,000;(from funds she inherited from her mother). The land has a value of $600,000 on;May 9, 2012.;? Ranch in Bandera (TX) with title listed;as ?Noah, Olivia, Isabella, and Benjamin;Canby, equal tenants in common.? (Olivia?s;interest in the ranch passed to Noah under her will.) The property was;purchased by Olivia in 2002 for $1,200,000. (Although Olivia used her separate;funds, no ? 2513 election was made when she filed a Form 709 reporting the;gift.) The ranch has a value of $1.5 million on May 9, 2012.;? Noah?s boating mishap, which led to his;death, was caused when his sailboat was carelessly swamped by a supply boat;owned by Gull Offshore Service Corporation. The captain of the supply boat was;clearly negligent and later fired by Gull. To avoid any further adverse;publicity of a court proceeding, Gull immediately offered Noah?s estate a;settlement of $1.5 million. As executors of Noah?s estate, Isabella and;Benjamin accepted the offer and received the settlement on July 25, 2012.;Isabella and;Benjamin also wanted to avoid any trial as;their father?s sailboat had recently been cited by the Coast Guard and local;maritime regulatory authorities for several safety violations.;? Noah inherited his personal residence on;Memorial Drive from Olivia. Under;Noah?s will, the property is to pass to Grace;Methodist Church to serve as a parsonage for their minister. On May 9, 2012;the property has an appraised value of $1.1 million.;? Other assets belonging to Noah include;the following.;Checking account at Metro Bank $ 11,200;CD;at Wells Fargo Bank (includes accrued interest to May 9, 2012) 105,000;City;of Houston Public Transit bonds (includes accrued interest to May 9, 2012);209,000;Insurance claim with Flamingo Casualty 141,000;Personal and household effects (furniture;auto, jewelry, etc.) 96,000;Note;receivable from Alan Canby 20,000;After a careful reading of the Gull Offshore;settlement (see prior note), the executors of Noah?s estate could find no;mention that the $1.5 million included the loss of the sailboat. Therefore;they filed a claim with Flamingo Casualty for the recovery allowed under the;policy insuring the sailboat.;The;note receivable arose from a loan Noah made in 2009 to his nephew, Alan;Canby. Alan was to use the $20,000 to start a;driver training school. After almost a year of losses, the operation ceased.;Alan never filed for bankruptcy but left town, and his current whereabouts are;unknown.;? Noah?s liabilities (besides the mortgage;held by Plano Trust Company and paid by the estate) include;Credit card debt $ 3,400;Unpaid household bills (utilities, security service;pest control, etc.) 2,300;Fines due for safety violations on sailboat;3,100;Amount due on church pledge 8,000;Amount promised to a niece, Natalie Canby;when she graduated from college 5,000;Federal income tax (January 1, 2012 to May 9;2012) 38,500;? Funeral and administration expenses are;listed below.;Funeral expenses $12,000;Attorney?s fees 38,000;Accounting fees 18,000;Appraisal fees and court costs 11,000;Isabella and Benjamin are the sole heirs. Due;to their experience in handling their mother?s estate, Noah?s will designates;them as the executors of his estate. For obvious reasons, they serve without;fee. The administration of Noah?s estate is completed with the Harris County;Probate Court on November 29, 2012.;Prepare an estate tax return (Form 706) for;Noah. Make the following assumptions.;? No ? 2032 election is made, and ?? 2032A;and 6166 (see Chapter 19) are not appropriate.;? Disregard any request for information;that is not available.;? Some deductions require a choice (Form 706;or Form 1041) and cannot be deducted twice (see Chapters 19 and 20). Resolve;all choices in favor of Form 706.;? Noah has made no prior taxable gifts.;? Relevant Social Security numbers;Name;Social Security Number;Noah;D. Canby 123-45-6785;Olivia Canby 123-45-6786;Isabella Canby 123-45-6787;Benjamin Canby 123-45-6788


Paper#42936 | Written in 18-Jul-2015

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