if man transfers life insurance policy into an irrevocable trust, and the policy is worth $30,000, and wife, child, and future grandchildren have withdrawal rights, and wife and child were given notice of the transfer to the trust, and no grandchildren are born yet, how much is the value of the gift to the wife and child?
the withdrawal right is limited to 12,000 per year, so would the gift value be 12,000 to each, or would it be 15,000 each? if 12,000 each, who is the recipient or how do you report the remaining 6,000?
i've heard two theories on this:
(a) report the gift as 15,000 each, but only 6,000 is taxable since both bene's will be listed under the trust as having 12,000 withdrawal rights.
(b) report the gift as 12,000 each, and have a third beneficiary under the trust entry called "remaindermen of trust" and their gift would be 6,000.
In either case, allocate 30,000 of your GST exemption to the gift.
the withdrawal right is limited to 12,000 per year, so would the gift value be 12,000 to each, or would it be 15,000 each? if 12,000 each, who is the recipient or how do you report the remaining 6,000?
i've heard two theories on this:
(a) report the gift as 15,000 each, but only 6,000 is taxable since both bene's will be listed under the trust as having 12,000 withdrawal rights.
(b) report the gift as 12,000 each, and have a third beneficiary under the trust entry called "remaindermen of trust" and their gift would be 6,000.
In either case, allocate 30,000 of your GST exemption to the gift.
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