Kathleen is married to Paul, and they have two teenage children. Kathleen transfers $1 million of securities to an irrevocable trust, designating a third-party trust company to serve as trustee. The trust provides for discretionary distributions of income and principal to Paul for his lifetime. Upon Paul’s death, the trust assets will be distributed to Kathleen if she is still living, otherwise to Kathleen’s then-living issue per stirpes.

a. Evaluate Kathleen’s estate tax exposure under § 2037, stating any assumptions you may find necessary.

b. Same above except Paul can withdraw the trust principal upon written notice delivered to the trustee.

Answer rating: 100% (QA)

a Under 2037 Kathleen may be exposed to estate tax exposure This is because the trust asse... View the full answer