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:

Service Gaps Model

A framework for identifying and analyzing the discrepancies between customers' expectations of a service and their actual experiences, aiming to improve service quality.

Service Providers

Companies or individuals that offer services to others in exchange for payment.

Delivery Gap

The discrepancy between a company’s service quality specification and the actual service delivered to customers, often leading to customer dissatisfaction.

Communication Gap

A type of service gap; refers to the difference between the actual service provided to customers and the service that the firm’s promotion program promises.