Trusts-Minors

Question 1

UGMA

Answer 1

gift transfered
someone acts as custodian for the minor
can gift:
cash, securities, life insurance, annuities
NO real property
taxable to minor

Question 2

UTMA

Answer 2

Can transfer Real Estate, partnership interests, patents, royalty interests, intellectual property
taxable to minor

Question 3

UTMA UGMA Gross Estate

Answer 3

If the donor is named custodian and predeceases minor…assets are included in gross estate.

• can’t be used to support minor to retain income shift
• property goes to minors estate if dies

Question 4

2503 B Trust

Answer 4

CAN be used for minors
income producing investments
provides stream of income
Subject to kiddie tax
Income = gift of present interest (qualifies for the exclusion) still subject to income tax
Corpus = gift of future interest (no exclusion)

Might be a better adult trust (bad boy trust)

Question 5

2503 C Trust

Answer 5

any investments
Donee must be able to request a full distribution at 21 or soonerPresent interest gift
Subject to trust tax rules not kiddie tax

Trust gets a $100 exemption

Question 6

Sprinkling Provisions

Answer 6

the trustee is granted the power to direct trust income

can sprinkle he income among more than one bene

Question 7

spray provision

Answer 7

when the trustee is afforded the right to make distributions in different amounts among permissible benes

Question 8

Rule against perpetuities

Answer 8

• rule on how long a trust will last
• generally no more than 21 years after the death of someone who was alive on the date that the interest was created (i.e. life in being)
• if not enforced in that state, dynasty trusts may be created

Question 9

Dynasty Trust

Answer 9

benefit multiple future generations
free of estate, gift and GST
can last for lives in being plus 21 years and 9 months
or as long as local law allows