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:

Density Independent

Referring to factors affecting the growth, size, or mortality of a population that do not depend on the density of the population.

Density Dependent

Factors whose effects on the size or growth of the population vary with the population density.

Earthquake

A natural geological event characterized by the sudden release of energy in the Earth's crust that creates seismic waves, often causing shaking and displacement of the ground.

Reproductive Base

Of a population, members of the reproductive and pre-reproductive age categories.