Prior to his death, Jay set up a $2 million irrevocable trust for his beloved da
ID: 2722831 • Letter: P
Question
Prior to his death, Jay set up a $2 million irrevocable trust for his beloved daughter, Rebecca. The trust gave Rebecca a life estate in all income from the trust and when Rebecca died the remainder would go to Jay's son, Andy. However, Jay kept the right to have the property go instead to Rebecca's daughter, his granddaughter, if he was alive at the time of Rebecca's death. Jay passed away before Rebecca, which secured Andy's right to receive the remainder of the trust. Will any of the trust be included in Jay's gross estate?
a. Yes
b. No
Explanation / Answer
Answer
Answer : b. No
When money is put into an irrevocable trust, the assets no longer belong to you. They belong to the trust itself. As a result, the money cannot be subject to estate taxes. While a trustee ultimately controls the money, you can create stipulations on its use, and money can be distributed from a trust even while you are alive.
Jay set up a $2 million irrevocable trust for his beloved daughter, Rebecca. So Trust is irrevocable. Therefore, $2 million will belong to the trust itself. So, those $2 million of trust cannot be included in Jay's gross estate.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.