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Question 12: A father plans to create a trust for the benefit of his 22-year-old son and wishes to take
advantage of the gift tax annual exclusion. He has named a bank as trustee. Which of the following
trust provisions would cause the gifts to be ineligible to qualify for the gift tax annual exclusion?
1.The trust income is to be paid to the son or accumulated at the discretion of the trustee.
2.The income is to be accumulated until the son reaches age 32 when all accumulated income and
principal are to be distributed to him.
A. 1 only
B. Both 1 and 2
C. Neither 1 nor 2
D. 2 only
Correct Answer: B
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