Terry Is Considering Transferring Assets Valued at $400,000 to an Irrevocable

question 5

Essay

Terry is considering transferring assets valued at $400,000 to an irrevocable trust for the benefit of her son, Cliff, age 15, with First National Bank as trustee. Her attorney has drafted a trust agreement that provides that Cliff is to receive income at the trustee's discretion for the next 20 years and that at age 35, the trust assets will be distributed equally between Cliff and his sister Joanna. Terry anticipates that her husband will consent to gift splitting. What tax issues should Terry and her husband consider with respect to the trust she is creating?

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Definitions:

2-Hexanone

An organic compound, a ketone, with the formula C6H12O, known for its use as a solvent in various industrial applications.

Intense Peak

A significant and prominent peak in a spectrum or chromatogram, indicating a high concentration or abundance of a specific analyte.

Mass Spectrum

A chart or graph that displays the distribution of ions by mass in a sample, useful for identifying substances and determining their structure.

2-Methylpentan-3-one

An organic compound characterized by a ketone functional group placed on the third carbon of a methylpentane backbone.