Analysis of trust activity. Jack Mason is a single parent with three minor children. His will provides for the creation of a trust for the benefit of his three children. His entire net estate is to be...

Analysis of trust activity. Jack Mason is a single parent with three minor children. His will provides for the creation of a trust for the benefit of his three children. His entire net estate is to be placed into the trust, and the trustee is authorized to approve disbursements to the children until they reach the age of 25. Upon reaching the age of 25, each child is to receive their proportionate share of the trust principal and income. For example, the first child to reach age 25 will receive one-third of the trust principal and income. The next child to reach age 25 will receive one-half of the trust principal and income at that time.

The following facts relate to the trust between the time of Mason’s death and the first child’s 25th birthday.

a. The following assets were transferred to the trust after the settlement of Jack Mason’s estate: Cash, $100,000; stock in IBM, $150,000; investment in real estate partnership, $400,000; and forest land, $200,000.

b. Subsequent to Mason’s death, an investment in a limited partnership was discovered. The investment was valued at $40,000.