Terry is considering transferring assets valued at $400,000

| September 10, 2018

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?Answer:• Will any portion of Terry’s transfer be classified as a gift of a present interest?• Will the transfer in trust qualify for an annual exclusion under the 2503(c) trust provisions?• Does gift splitting seem to be advisable?

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