Justine transferred $100.000 to a 2503(c) trust for her daughter Mattie last wee
ID: 2644167 • Letter: J
Question
Justine transferred $100.000 to a 2503(c) trust for her daughter Mattie last week. Mattie will receive the accumulated income and corpus when she reaches age 21. Which statement is not correct? a. Mattie can request in writing that the trustee continue the trust once she reaches age 21. b. The gift is a future interest gift because income will not be distributed to Matte until she turns 21. c. If Matte dies before the assets are distributed, they are included in her estate. d. Justine can take an annual exclusion to reduce the taxable gift to $86,000.Explanation / Answer
Statement d is not correct since according to Section 2503 of the Taxable gifts act:
Mattie will be able to enjoy the returns from the trust only when she reaches the age of 21. Hence it is a gift of future interest which does not qualify for exclusion from tax.
Statement a, b and c are correct since they are the legal specifications according to section c of act 2503 stated for Transfer for the benefit of minor.
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