Which of the following statements concerning powers of invasion are correct? I A

Question

Which of the following statements concerning powers of invasion are correct?

I A five-and-five power may be added to a nonmarital trust without the trust assets being includible in the surviving spouse’s gross estate.

II A five-and-five power may be added to a Q-TIP Trust.

III The surviving spouse may be given the power to invade the entire corpus of a marital trust.

IV The surviving spouse need not be given a power to invade principal under a power of appointment trust.

A. I and II only

B. II and III only

C. III and IV only

D. I, II, III, and IV

Provide a detailed explanation for your answer. ONLY answer if you have a strong estate planning background.

Explanation / Answer

Correct answer is D:

Explaination:

In marital trust the trust assets are included in the suriviving wife's gross estate but in non marital trust it is excludable.

A five and five power may be added to Q-TIP trust.

Under section 2056 of the federal estate tax permits a marital deduction for the value of the life estate created in the surviving spouse provided the life estate includes a power of appointment that is excercisable by the surviving spouse alone in all the events in favor of her estate. Taxpayers have sought to take advantage of this deduction by giving the surviving spouse a life estate with the power to consume the property or invade the corpus od the marital trust.

The surviving spouse need not be given a power to invade principal under a power of appointment trust.

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