Melvin funds an irrevocable trust with Holcomb Bank as trustee and reserves the right to receive the income for seven years. He provides that at the end of the seventh year the trust assets will pass outright to his adult daughter, Pamela, or to Pamela’s estate should Pamela not be alive. Melvin transfers assets valued at $1 million to the trust; the assets at present are producing income of about 2.5% per year. Assume that the Sec. 7520 rate per the actuarial tables for the month of the transfer is 4%. What tax issues should Melvin consider regarding the trust?