Reference no: EM133070787
Your client, Grace and Juan Rodriguez, have three small children, and own a small home in Phoenix, Arizona. You are a CFP professional and helped guide them through the process of setting up a revocable living trust. Grace and Juan put their home and cash accounts into the trust. The trust is named the Rodriguez Family Trust.
1. If the Rodriguez Family Trust was a complex trust, they would be able to distribute principal to both beneficiaries and charities.
A. True
B. False
2. Which of the following is not a tax consequence associated with a defective trust?
A. The income tax is shared by the trust and the trust beneficiaries.
B. Known as an asset freezing technique to avoid estate taxes on appreciating assets
C. The trust assets are removed from the Grantor's estate.
D. The Grantor is subject to income tax.
3. Assume Grace and Juan are alive, and their Family Trust is a grantor trust. If the income in the trust is taxable to the grantors, Grace and Juan, under grantor trust rules, this means that the attorney who drafted the trust definitely made a mistake.
A. True
B. False
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