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?

Understand the implications of dividend policies on corporate financial strategy.

Explain the financial reasoning behind different corporate dividend actions and policies.

Understand the relationship between corporate financial decisions and shareholder wealth.

Compare and contrast different methods of distributing excess cash to shareholders.

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Definitions:

Straight Lines

The shortest distance between two points; a line with no curvature.

Quad-Base

Refers to a cane with four “feet.”

Body Mechanics

The use of correct posture and movement in daily activities to prevent injury and maintain health.

Stabilize

To make or become unlikely to give way or overturn; to make something steady.