Grandfather dies in 2020 with $220,000 of GST exemption remaining and makes no affirmative allocation of GST exemption on his estate tax return. Grandfather made the following testamentary transfers at his death:

-$100,000 to Grandson

-$100,000 to trust that provides mandatory distributions of income to Grandson and upon Grandson’s death is distributed to Grandson’s issue.

-$100,000 to trust that provides mandatory distribution of income to Son for Son’s life. Upon Son’s death, the remainder of the trust is distributed to Grandson.

-$100,000 to trust that provides discretionary distributions of income and principal to Son and is distributed according to Son’s general power of appointment at his death, or, in default of such power, to Grandson.

Required

How much of each transfer receives grandfather’s remaining GST exemption and why? What is the inclusion ratio of each of the three trusts?

Answer rating: 100% (QA)

ANSWER First let us classify the 4 transfers above as direct or indirect ski... View the full answer