Sandra, Who Is Married, Creates an Irrevocable Trust in the Amount

question 13

Multiple Choice

Sandra, who is married, creates an irrevocable trust in the amount of $200,000 for her 18-year-old daughter, Kelly. She names the bank as trustee. Before Kelly reaches age 21, the trustee may pay the income to Kelly. Kelly will receive any undistributed assets when she reaches age 21. If Kelly dies before age 21, the assets will be paid to her estate. In addition, Sandra creates an irrevocable trust for her son, Kevin, age 21. He is entitled to withdraw up to $30,000 per year. Sandra contributes $30,000 in the current year. Sandra elects gift splitting with her husband. Her husband makes no gifts in the current year. Sandra's annual exclusions to be claimed on her gift tax return total

• A)$30,000.
• B)$15,500.
• C)$12,000.
• D)$0.

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Definitions:

Monthly Payments

Regular payments made every month, often in the context of loans or leasing agreements.

Callable Bond

A type of bond that gives the issuer the right to repay the bond before the maturity date.

Interest Rate

The percentage of a sum of money charged for its use, often expressed annually.

Convertible Bonds

Corporate bonds that have a provision that they may be converted to a designated number of shares or to a designated value of the corporation’s stock.