3.1.9 Basic Quiz -- Education Annuity Trust

An annuity trust for a term of years is an excellent way to provide a student with a fixed income for college.

True False

The income paid from the annuity trust is taxable to the donor.

True False

The person funding the annuity trust is the one who receives the charitable deduction.

True False

Depending on the payout percent from the annuity trust, it may be possible to pay out some principal and some capital gain.

True False

When a parent or grandparent funds an annuity trust for a child or grandchild, there may be gift tax consequences.

True False

It is possible for the grantor of a term of years annuity trust to retain the right to revoke the income stream of the non-charitable beneficiary and thereby use his or her annual exclusion each year to offset any gift tax on each annual payment to the non-charitable beneficiary.

True False

When an annuity trust is funded by one person for another without retaining the right to revoke, the gift equals the difference between the trust funding amount and the charitable deduction.

True False

If a donor retains a right of revocation over an income stream of another person and dies before the expiration of the trust, the trust corpus is included in the donor's estate.

True False

If a donor funds an annuity trust for another person, he or she must recognize all of the capital gains tax when filing the income tax return for that year.

True False

If the donor funds an annuity trust for another person's life, the donor can still retain the right to revoke and use the annual exclusion when trust income is distributed.