Mallory would like to create an irrevocable trust for her children that will remove assets from her gross estate, but she is uncomfortable relinquishing all control of the property because her children are young and they may not prove to be financially responsible. She would like to be able to change the beneficiaries of the trust, perhaps to her grandchildren, or change the shares of each beneficiary in the event they waste their distributions. Will the retention of these powers affect the transfer to the trust?     A) A transfer to an irrevocable trust will remove the assets from Mallory's gross estate regardless of any retained powers.     B) The powers retained by Mallory are insufficient to create an incomplete transfer.     C) The transfer would be incomplete only if Mallory retained the right to receive trust income. The power to change the beneficiaries or their shares is not a significant retained power.     D) The retention of such powers will cause the gift to be an incomplete transfer because she is not giving up sufficient control of the trust assets.

Individual Income Taxes
43rd Edition
ISBN:9780357109731
Author:Hoffman
Publisher:Hoffman
Chapter6: Deductions And Losses: In General
Section: Chapter Questions
Problem 22DQ: Ray loses his job as a result of a corporate downsizing. Consequently, he falls behind on the...
icon
Related questions
Question

Mallory would like to create an irrevocable trust for her children that will remove assets from her gross estate, but she is uncomfortable relinquishing all control of the property because her children are young and they may not prove to be financially responsible. She would like to be able to change the beneficiaries of the trust, perhaps to her grandchildren, or change the shares of each beneficiary in the event they waste their distributions. Will the retention of these powers affect the transfer to the trust?

 
 
A)
A transfer to an irrevocable trust will remove the assets from Mallory's gross estate regardless of any retained powers.
 
 
B)
The powers retained by Mallory are insufficient to create an incomplete transfer.
 
 
C)
The transfer would be incomplete only if Mallory retained the right to receive trust income. The power to change the beneficiaries or their shares is not a significant retained power.
 
 
D)
The retention of such powers will cause the gift to be an incomplete transfer because she is not giving up sufficient control of the trust assets.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Application Of Time Value of Money
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Individual Income Taxes
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
SWFT Comprehensive Volume 2019
SWFT Comprehensive Volume 2019
Accounting
ISBN:
9780357233306
Author:
Maloney
Publisher:
Cengage
SWFT Corp Partner Estates Trusts
SWFT Corp Partner Estates Trusts
Accounting
ISBN:
9780357161548
Author:
Raabe
Publisher:
Cengage
SWFT Comprehensive Vol 2020
SWFT Comprehensive Vol 2020
Accounting
ISBN:
9780357391723
Author:
Maloney
Publisher:
Cengage
SWFT Essntl Tax Individ/Bus Entities 2020
SWFT Essntl Tax Individ/Bus Entities 2020
Accounting
ISBN:
9780357391266
Author:
Nellen
Publisher:
Cengage
Administration Of Wills/Trusts/ And Estates
Administration Of Wills/Trusts/ And Estates
Finance
ISBN:
9781285281308
Author:
Brown
Publisher:
Cengage