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rights to demand a distribution of trust property. The fact that
none of the beneficiaries exercised their rights or that none of
the beneficiaries requested notification of future transfers of
property to the trust does not imply to us that the beneficiaries
had agreed with decedent not to do so, and we refuse to infer any
understanding.
The evidence does not support respondent’s contention that
the contingent beneficiaries believed they would be penalized for
exercising their rights to demand distributions of trust property
or that the trustees purposefully withheld information from the
beneficiaries.
Further, the contingent beneficiaries received actual notice
from the trustees with regard to their rights. Decedent intended
to benefit the contingent beneficiaries by giving them interests
in the trust. The contingent beneficiaries were decedent’s
relatives.
For the reasons stated above, the contingent beneficiaries’
unrestricted rights to demand immediate distributions of trust
property are to be treated as present interests in property.
Decedent’s transfer of the commercial building to the trust
qualifies for 16 annual gift tax exclusions under section 2503(b)
with regard to the present interests of the 16 contingent
beneficiaries therein.
To reflect the foregoing,
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Last modified: May 25, 2011