e. 3, 4, and 5 40 . . Income distributed from an estate or trust to a beneficiary maintains its character in the hands of the beneficiary (e.g. capital gain, ordinary income, tax exempt income). True False a. b. 41. a. c. 42. Which of the following statements about Crummey trusts is TRUE? They require notification of withdrawal rights only for beneficiaries who have reached majority. b. They usually provide a catch-up provision in subsequent years if the annual exclusion is not utilized in a prior year. They usually provide a withdrawal right of the lesser of the amount of available annual gift tax exclusion or the value of the gift property transferred. d. There are never any gift tax consequences to the beneficiaries. Cathy is creating an irrevocable life insurance trust for the benefit of her three children. The trust will purchase and be owner of life insurance on her life. Cathy plans to make gifts to the trust each year of amounts sufficient to pay the insurance premiums. Each of the children will be given a Crummey withdrawal power that lapses each year. The trust will have all of the following characteristics EXCEPT: Trust property will not be includable in her estate for estate tax purposes. b. Gifts to the trust will qualify for the gift tax annual exclusion. Trust assets can provide additional liquidity for the payment of estate tax. d. The lapse of Crummey powers in excess of the greater of $5,000 or 5% of trust assets will be ignored for gift tax purposes. a. c. e. 3, 4, and 5 40 . . Income distributed from an estate or trust to a beneficiary maintains its character in the hands of the beneficiary (e.g. capital gain, ordinary income, tax exempt income). True False a. b. 41. a. c. 42. Which of the following statements about Crummey trusts is TRUE? They require notification of withdrawal rights only for beneficiaries who have reached majority. b. They usually provide a catch-up provision in subsequent years if the annual exclusion is not utilized in a prior year. They usually provide a withdrawal right of the lesser of the amount of available annual gift tax exclusion or the value of the gift property transferred. d. There are never any gift tax consequences to the beneficiaries. Cathy is creating an irrevocable life insurance trust for the benefit of her three children. The trust will purchase and be owner of life insurance on her life. Cathy plans to make gifts to the trust each year of amounts sufficient to pay the insurance premiums. Each of the children will be given a Crummey withdrawal power that lapses each year. The trust will have all of the following characteristics EXCEPT: Trust property will not be includable in her estate for estate tax purposes. b. Gifts to the trust will qualify for the gift tax annual exclusion. Trust assets can provide additional liquidity for the payment of estate tax. d. The lapse of Crummey powers in excess of the greater of $5,000 or 5% of trust assets will be ignored for gift tax purposes. a. c