Trust And Executorship Question Paper

Trust And Executorship

Course:Bachelor Of Commerce

Institution: Kenyatta University question papers

Exam Year:2008

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2007/2008
SECOND SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR
OF COMMERCE
BAC 411: TRUST AND EXECUTORSHIP ACCOUNTS
_____________________________________________________________________
DATE: Thursday 19th June, 2008
TIME: 11.00 a.m. – 1.00 p.m.
-------------------------------------------------------------------------------------------------------
Answer ALL questions.

Q. 1
Benda died on 31 October 2007 and was survived by his only grandson,
Mwala, the son of his son, Mutua. By his will, which barred equitable
appointment and was silent on the date of payment of legacies, he left his
estate as follows:
To my cousin Mwamba my beach plot,
To my friend, Nyambane my car,
To my Nephew, Pamela my boat
To each of my two sons Kshs 100,000
To my brother in-law Shs 20,000
To my housekeeper, Awendo if still in my employment Shs
200,000
To my church pastor, Charles Shs 50,000
To my local church Shs 50,000 to buy a guitar in memory of
my late father,
To my neighbours Nyawira, Mwende, and Langat Shs 10,000.
To my sports club, my outboard engine and to my grandson
Mwala the residue absolutely.

On 30th March 2008, the Executors after paying all the liabilities of the estate
and the expenses of administration were ready to assent to the legacies. The
property in their possession and its value at that rate was:
Shs.
Car, fiat
90,000
Car Toyota
50,000
Boat
25,000
Furniture & Jewellery
95,000
Farm
40,000
Beach plot
12,000
Shs 150,000, 6% Government stock 1,200,000
Bank balance
688,000
2,200,000
Additional information
(i) Pamela died on 30th March 2007
(ii) Benda had two brothers – in law surviving at 31 October 2007.
(iii) Awendo was still employed at 31 October 2004.
(iv)
During his lifetime Benda had provided his local church with a guitar
in memory of his late father.
(v)
Nyawira and Langat both predeceased Benda.
(vi)
The farm had been purchased by Benda using proceed form sale of the
outboard engine.

Required:
Prepare the Estate distribution schedule. (Give reasons should you decide that
the executors should not assent to any legacies).(20 marks)

Q. 2 (a)
Explain the various ways on how a trustee may be terminated. (5 marks)
(b)
Explain how testamentary dispositions can fail (10 marks)

Q. 3
Kaka died on 1st January 2006 and by his will left his house to his wife for her
life, and on her death, to his eldest son Tobias absolutely. He left the residue
of his estate to be held on trust for the benefit of his wife for her life, and on
death, to be shared among his other children: Ndanu, Wanza, Maundu and
Mwanza. His will gave no directions as to the investment of trust funds.

On 1st January 2006 his house was valued at Sh. 13 million. He held 100,000
shares in EABL valued at Sh. 42-48 and Sh. 5000,000 nominal 12% Kenya
government bond valued at 90-92. His bank balance was Sh. 2,500,000 and
his debts and funeral expenses amounted Sh. 300,000.

On 1st July 2007, EABL shares were quoted at Sh. 48-50 and the 12% Kenya
Government Bond was quoted at Sh. 88 – 92.

Required:

Prepare the estate capital account and balance sheet on July 1st 2007.
(20 marks)

Q. 4 (a)
Explain the powers and duties of the personal representatives under the succession Act. (11 marks)
(b)
Briefly explain the term Marshalling . (4 marks)

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