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:

Equilibrium Price

The price at which the quantity of a good demanded by consumers equals the quantity supplied by producers, resulting in a stable market condition.

Demand Decreases

A reduction in the quantity of a good that consumers are willing and able to buy at each possible price.

Equilibrium Quantity

The amount of goods or services supplied and demanded at the equilibrium price, where the quantity supplied equals the quantity demanded.

Demand Increases

A situation in which the quantity of a product or service that consumers are willing and able to buy at a specific price rises.