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Nate transfers property to Mega Bank Trust Co. as trustee under a trust instrument that contains the following provisions: The trustee shall distribute as much of the trust income or principal to such one or more of the settlor, the settlor's spouse, or the settlor's children in such amounts and at such intervals as the trustee, in its sole discretion, determines necessary or appropriate. Upon settlor's death, the trust property shall be distributed to the settlor's then living descendants per stirpes. Settlor hereby retains the right to revoke or amend the terms of the trust through a written declaration delivered to the trustee.

a. Discuss the gift tax consequences upon the funding of the trust and the estate tax consequences of the trust upon Nate's death.

b. Same as (a), except that two years prior to his death, Nate exercised his right to amend the trust by revising the first paragraph to read as follows: The trustee shall distribute as much of the trust income or principal to such one or more of settlor's spouse or the settlor's children in such amounts and at such intervals as the trustee, in its sole discretion, determines necessary or appropriate. After making this alteration, Nate relinquished his power to revoke or amend the trust. Discuss the gift tax consequences of these changes and the estate tax consequences upon Nate's death.

c. How would your answer to (b) change, if at all, had the revisions to the trust in (b) been made four years prior to Nate's death?

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