3. Problem 21 (1)(a) & (b) D T A - Independent B or Estate
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.

4. Problem 21 (1)(c) D T A T can accumulate income - Independent
Property Transfer T
- Independent A
B or Estate
Income for Life
Remainder
Present interest? No. A not assured right of present enjoyment. B’s remainder clearly future interest.

5. Problem 21 (1)(d) D T A or C 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.

6. Problem 21 (1)(e)&(f) D T A 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.

7. Problem 21 (2) D T A - Independent 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).

8. 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

9. Problem 21 (3)(c) & (d) D ILIT 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

10. Problem 21 (3)(e) & (f) D ILIT Cs GCs Crummey converts
5k premiumto present
interest. Gift sheltered by
annual exclusion.
(f) Premium 10k. Crummey
works for D’s annual exclusion.
Lapse of Crummey triggers “5&5”
for C. C has taxable gift of 5k excess
per 2702, plus 2036 pull back into
C’s estate.
Life policy
Worth 75k
5k premiums
ILIT
Support post death
Crummey
Right Cs
GCs

11. Problem 21 (3)(e) & (f) D ILIT Cs GCs Crummey converts
5k premiumto present
interest. Gift sheltered by
annual exclusion.
(f) Premium 10k. Crummey
works for D’s annual exclusion.
Lapse of Crummey triggers “5&5”
for C. C has taxable gift of 5k excess
per 2702, plus 2036 pull back into
C’s estate.
Life policy
Worth 75k
5k premiums
ILIT
Support post death
Crummey
Right Cs
GCs

12. Problem 21 (3)(g) & (h) D ILIT C GC (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 - don’t bet on it.
Life policy
Worth 75k
10k premiums
ILIT
Support post death
Crummey
Right
Crummey
Right C GC

13. Dena & Mark Estate Plan Per. Res. Trust Family L.L.C. Char. Rem. Trust
Remainder
Per. Res.
Trust
Family
L.L.C.
Daughter 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
Charitable Deduct
Cash
GC Trust - 4
GC Trust - 5
Alma
Maters
Dynasty
Trust
Income, Support
GC Trust - 6

14. Problem 21 (4)
Income accumulated to age 21. No annual exclusion because not expended for minor before age 21.
Trustee has discretion to spend for minor before age 21. Qualify for exclusion under 2503.
Funds only for college before 21. No annual exclusion under 2503 because “substantial restriction.”
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

15. Problem 21 (4)
Age of distribution set at 18. Qualifies under age 21 is max, not required.
Accumulated income must be distributed at age 21; corpus at age 25. Per Herr case, income may be separated from corpus under Hence, income interest qualifies for exclusion, but not corpus.
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

16. 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