George Transfers Property to an Irrevocable Trust for the Benefit

question 12

Multiple Choice

George transfers property to an irrevocable trust for the benefit of his adult children and names himself as trustee. The trust document requires the trustee to distribute trust property to the beneficiaries at the trustee's discretion with the possibility of no distribution to certain beneficiaries as the trustee deems appropriate. The trust will terminate at the end of nine years, and the property will pass to George's children. Which of the following statements is correct?

• A)The beneficiaries receive a present interest in the trust property when George transfers the assets to the trust.
• B)The transfer by George is eligible for the annual gift tax exclusion.
• C)George's transfer of property to the trust is not taxed under gift tax rules at the date of transfer.
• D)George's transfer of property to the trust is a gift of a future interest.

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Definitions:

Graded Bed

A sedimentary or volcanic layer that displays a gradational change in grain size from bottom to top.

Current Strength

A measure of the flow rate of water within ocean currents, typically quantified in terms of volume per time, such as cubic meters per second.

Piling of Sediment

The accumulation or stacking up of sedimentary particles, often by natural processes such as water or wind transport.

Cross Beds

Cross beds are sedimentary structures forming as inclined layers within horizontal units of sediment, often indicating the direction of ancient wind or water flows.