Question #61 of 85 Leon has a gross estate estimated at $14.3 million. He is not married but does have two adult children who he wants to receive all of his estate. Leon is the sole owner of income-producing real estate valued at $900,000. He currently depends on the income produced by this real estate to maintain his standard of living. However, Leon is certain that when he retires in 10 years, at age 65, he will no longer need this income due to a generous income from a defined benefit retirement plan. Leon's financial planner has told Leon that his estate could face a severe liquidity crisis if in retirement. In which one of the following trusts would it be best for Leon to place his income-producing property in order to improve his estate's liquidity position in retirement? A) An irrevocable charitable lead trust to last for 10 years that will pay the remainder to his children B) An irrevocable trust to last for 10 years that will pay Leon a fixed percentage of the value of the trust assets as of January 1 of each year, with the remainder to his children (GRAT) C) An irrevocable trust to last for 10 years that will annually pay Leon income at the trustee’s discretion, with the remainder to his children (GRIT) D) A revocable trust to last for Leon’s lifetime, with all trust assets to be distributed to his children at his death
Question #61 of 85 Leon has a gross estate estimated at $14.3 million. He is not married but does have two adult children who he wants to receive all of his estate. Leon is the sole owner of income-producing real estate valued at $900,000. He currently depends on the income produced by this real estate to maintain his standard of living. However, Leon is certain that when he retires in 10 years, at age 65, he will no longer need this income due to a generous income from a defined benefit retirement plan. Leon's financial planner has told Leon that his estate could face a severe liquidity crisis if in retirement. In which one of the following trusts would it be best for Leon to place his income-producing property in order to improve his estate's liquidity position in retirement? A) An irrevocable charitable lead trust to last for 10 years that will pay the remainder to his children B) An irrevocable trust to last for 10 years that will pay Leon a fixed percentage of the value of the trust assets as of January 1 of each year, with the remainder to his children (GRAT) C) An irrevocable trust to last for 10 years that will annually pay Leon income at the trustee’s discretion, with the remainder to his children (GRIT) D) A revocable trust to last for Leon’s lifetime, with all trust assets to be distributed to his children at his death
Chapter19: Family Tax Planning
Section: Chapter Questions
Problem 32P
Related questions
Question
100%
Question #61 of 85
Leon has a gross estate estimated at $14.3 million. He is not married but does have two adult children who he wants to receive all of his estate. Leon is the sole owner of income-producing real estate valued at $900,000. He currently depends on the income produced by this real estate to maintain his standard of living. However, Leon is certain that when he retires in 10 years, at age 65, he will no longer need this income due to a generous income from a defined benefit retirement plan. Leon's financial planner has told Leon that his estate could face a severe liquidity crisis if in retirement.
In which one of the following trusts would it be best for Leon to place his income-producing property in order to improve his estate's liquidity position in retirement?
A)
An irrevocable charitable lead trust to last for 10 years that will pay the remainder to his children
B)
An irrevocable trust to last for 10 years that will pay Leon a fixed percentage of the value of the trust assets as of January 1 of each year, with the remainder to his children (GRAT)
C)
An irrevocable trust to last for 10 years that will annually pay Leon income at the trustee’s discretion, with the remainder to his children (GRIT)
D)
A revocable trust to last for Leon’s lifetime, with all trust assets to be distributed to his children at his death
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
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.Recommended textbooks for you
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT