Calculate the current value of the remainder interest

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On her 75th birthday, Gertrude transfers her home worth $700,000 to an irrevocable trust. The trust terms provide that Gertrude has the right to remain in the house for a period of 10 years. At the end of that period, the trust will terminate and the house will be distributed to her issue. (a) At a rate of 8%, calculate the current value of the remainder interest. (Note: this would be a vested gift to the issue). (b) Recalculate the remainder interest if it was contingent on Gertrude surviving the income period.

Reference no: EM131900644

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