Financial Planner

Answer: A - The transfer of property to an irrevocable trust usually results in a taxable gift. The grantor is subject to gift tax liability on the actuarial value of both the income stream and the remainder interest transferred to the trust beneficiaries. The actuarial value of the gift may be reduced by the fit tax annual exclusion if a beneficiary has a “present interest,” which can be created by giving a trust beneficiary an unrestricted right to the immediate use, possession, or enjoyment of property or income.