D

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Problem 21 (1)(a) (b)
D
Property Transfer
T
- Independent
A
B or Estate
Income for Life
Remainder
Present interest? Yes as to income No as to
remainder. Spendthrift clause irrelevant. Key
is mandatory income distributions.
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Problem 21 (1)(c)
D
T can accumulate income
Property Transfer
T
- Independent
A
B or Estate
Income for Life
Remainder
Present interest? No. A not assured right of
present enjoyment. Bs remainder clearly future
interest.
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Problem 21 (1)(d)
D
T must sprinkle income between A C.
Property Transfer
T
- Independent
A or C
B or Estate
Income for Life
Remainder
Present interest? No. Neither A, B or C assured
right of present enjoyment.
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Problem 21 (1)(e)(f)
D
T can accumulate income with A consent or
invade Corpus for A
Property Transfer
T
- Independent
A
B or Estate
Income for Life
Remainder
Present interest? Yes, as to A income interest.
A has control of present enjoyment. Corpus
invasion right not impact present income right.
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Problem 21 (2)
D
Annual exclusion? 5k Total amount of gifts?
15k If income term lengthened? Higher annual
exclusion.
20k securities
T
- Independent
A
A or Estate
Income for 4 yrs - 5k value

Remainder -15k
What annual exclusion impact if gift outright?
Make any sense? If any gift not covered by
annual exclusion, gift tax return due by 4/15 per
6075(b)(1).
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Problem 21 (3)(a) (b)
D

• Policy gift. 12k annual exclusion. 63K gift
  amount.
• 5k premium gifts. Sheltered by annual
• exclusion. No gift
• tax return required.

Life policy Worth 75k
5k premiums
C
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Problem 21 (3)(c) (d)
D

• c) Policy transfer. All
• future interest. 75k gift.
• 5k premium gifts. No annual exclusion. No
• present interest. 5k gift.

Life policy Worth 75k
5k premiums
ILIT
Support post death
Cs
GCs
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Problem 21 (3)(e) (f)
D

• Crummey converts
• 5k premiumto present
• interest. Gift sheltered by
• annual exclusion.
• (f) Premium 10k. Crummey
• works for Ds annual exclusion.
• Lapse of Crummey triggers 55
• for C. C has taxable gift of 5k excess
• per 2702, plus 2036 pull back into
• Cs estate.

Life policy Worth 75k
5k premiums
ILIT
Support post death
Crummey Right
Cs
GCs
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Problem 21 (3)(e) (f)
D

• Crummey converts
• 5k premiumto present
• interest. Gift sheltered by
• annual exclusion.
• (f) Premium 10k. Crummey
• works for Ds annual exclusion.
• Lapse of Crummey triggers 55
• for C. C has taxable gift of 5k excess
• per 2702, plus 2036 pull back into
• Cs estate.

Life policy Worth 75k
5k premiums
ILIT
Support post death
Crummey Right
Cs
GCs
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Problem 21 (3)(g) (h)
D
(g) Crummey converts 10k premium to present
interest. No 5 5 problems because neither C
or GC exceeds. (h) Premium 24k. Crummeys
protect D annual exclusion. Have C and GC each
made 7k taxable gift, subject to 2036 pullback?
Probably. If document reciprocal agreement to
allow lapse, could you argue consideration and
no gift? Long shot - dont bet on it.
Life policy Worth 75k
10k premiums
ILIT
Support post death
Crummey Right
Crummey Right
C
GC
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Dena Mark Estate Plan
Remainder
Daughter Trust
Family L.L.C.
Per. Res. Trust
Daughter Trust
Term Use
Invest. Assets
Income
Son Trust
Home
Char. Rem. Trust
GC Trust - 1
LLC Units
Dena Mark Living Trust
GC Trust -2
Stock
GC Trust - 3
Income
Remainder
GC Trust - 4
Charitable Deduct
Cash
GC Trust - 5
Alma Maters
Dynasty Trust
GC Trust - 6
Income, Support
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Problem 21 (4)

1. Income accumulated to age 21. No annual
   exclusion because not expended for minor before
   age 21.
2. Trustee has discretion to spend for minor before
   age 21. Qualify for exclusion under 2503.
3. Funds only for college before 21. No annual
   exclusion under 2503 because substantial
   restriction.
4. Trusts Age Boosts to age 25 with minor having
   30 day withdrawal right at age 21. Still qualify
   under 2503 even if affirmative act required of
   minor.

D
Property
T 2503
Minor C
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Problem 21 (4)

1. Age of distribution set at 18. Qualifies under
   2503 - age 21 is max, not required.
2. Accumulated income must be distributed at age 21
   corpus at age 25. Per Herr case, income may be
   separated from corpus under 2503. Hence, income
   interest qualifies for exclusion, but not corpus.
3. In (f), if income interest under age 21 less than
   12k, could income interest from 21 to 25 be
   tacked on to max annual exclusion? No per Levine
   case.

D
Property
T 2503
Minor C
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Problem 21 (4)
(h) Income must be distributed annually to child
to age 25, then corpus. Outside of 2503(c), but
income interest still qualifies for annual
exclusion because is present interest. If
trustee had power to accumulate, no hope for
annual exclusion.
D
Property
T 2503
Minor C
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