(16.6) D creates a trust with income to A for A’s life with a remainder to B or

Question

(16.6) D creates a trust with income to A for A’s life with a remainder to B or B’s estate. Discuss to what extent, if any, D has made a completed gift if A, B, and C are unrelated to D and:

D retains a power to give income to C, but only with A’s approval.

D retains no power over trust income, but does retain a power to make C or C’s estate the remainder-person if D secures A’s approval.

D retains a power to give either the income or the remainder, or both to C, but only with A’s approval.

D retains a power to revoke the entire trust, but only with A’s approval.

Explanation / Answer

Part A

Yes, D retains a power to give income to C, but only with A’s approval and this is gift because A has a vested interest in the income.

Part B

No, this is not a gift because we have no power of the trust income.

Part C

Yes, this is a completed gift because A has a vested interest. D doesn't have control.

Part D

Yes, it is a completed gift because A has vested interest

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