Chapter Nineteen: Mcgraw-Hill/Irwin
Chapter Nineteen: Mcgraw-Hill/Irwin
Chapter Nineteen: Mcgraw-Hill/Irwin
Accounting for
Estates and Trusts
McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
LO 1
Accounting for an Estate
19-4
LO 2
Legacies and Devises
Gifts of personal property are called
legacies or bequests
Specific legacy (Gift of personal property
from a directly identified source),
Demonstrative legacy , (Cash gift from
particular source),
General legacy (Cash gift from an unspecified
source), and
Residual Legacy (Gift from remaining estate
property).
19-5
Estate Distributions
19-7
LO 4 The Distinction Between
Income and Principal
19-8
The Distinction Between
Income and Principal
Principal of the estate includes the assets that
existed at the date of death, which became
assets of the decedents estate.
Adjustments to principal include:
Life insurance proceeds where the estate
was named beneficiary.
Debts.
Funeral expenses.
Gains and Losses from sale of assets.
Homestead and family allowances.
19-9
The Distinction Between
Income and Principal
Income of the estate includes all revenues and
expenses incurred after the date of death.
Reductions to income include:
Recurring taxes (such as real and personal
property taxes),
Ordinary repair expenses,
Water and other utility expenses,
Insurance expenses, and
Other ordinary expenses required for the
management and preservation of the estate.
19-10
Recording the Transactions
of an Estate
19-11
LO 5
Charge and Discharge Statement
Periodic reports disclose progress in
settling the estate.
Separate statements are required for
income and principal.
Each statement reports:
Assets under the control of the
executor.
Disbursements made to date.
Any property still remaining.
19-12
LO 6
Trusts
19-13
Different Types of Trusts
19-14