Dave irrevocably transfers $1 million of marketable securities to a trust under which the trustee is permitted to distribute income and/or principal to or among Dave and his children in such amounts as the trustee deems advisable. Upon Dave’s death, the trust assets will be distributed to Dave’s living issue.

1. Dave and his sister serve as co-trustees of the trust. Discuss the gift tax consequences to Dave upon funding the trust and the estate tax consequences to Dave’s estate upon his death.
2. How would your answer change, if at all, if Dave did not serve as trustee?

Answer rating: 100% (QA)

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