Estate of Austin Korby - Page 7

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          and interest earned on the investment accounts were deposited               
          into the checking account.  KPLP’s checking account was also used           
          to pay KPLP’s expenses.  Austin and Dennis were the only                    
          signatories on the checking account.  In August 1995, Austin                
          purchased an annuity from LifeUSA Insurance Co. for $140,000.               
          Austin named himself as the annuitant and KPLP as the owner on              
          the annuity application.  The annuity entitled Austin to payments           
          after the annuity date, September 5, 2005, for a 10-year period             
          as long as he was living.  If Austin died during the 10-year                
          period, the payments would continue to his sons as irrevocable              
          beneficiaries.  Austin’s sons were also entitled to a death                 
          benefit if Austin died before the annuity date.                             
               As stated above, the Korbys transferred their house to the             
          living trust in 1995, and Austin lived in the house until 1998.             
          From 1995 through 1998, KPLP and the living trust paid many of              
          the Korbys’ household expenses.  The living trust made payments             
          to Edna’s nursing home, various drug stores, other miscellaneous            
          stores, and the Internal Revenue Service (IRS).  The living trust           
          also made occasional cash payments to Austin.  To pay all these             
          expenses, the living trust received cash payments from KPLP and             
          the Korbys’ Social Security payments.  KPLP paid the utility and            
          heating bills, property taxes, and insurance for the Korbys’                
          residence and paid for subscriptions to newspapers and                      
          periodicals.  For each year, KPLP deducted as a business expense            

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Last modified: May 25, 2011