Which type of transfer during life is considered completed concerning the decedent’s estate?

Which type of transfer during life is considered completed concerning the decedent’s estate?

• A. A grantor retained income trust
• B. A grantor trust established by decedent
• C. $5,000 to the decedent's son before death
• D. A grantor retained annuity trust

Answer: (C)

The transfer of $5,000 to the decedent's son before death is regarded as a completed transfer concerning the decedent's estate because it represents an outright gift given during the decedent’s lifetime. Such gifts are considered completed since the decedent no longer retains any control or interest in the transferred asset once the gift is made. This transfer also aligns with tax implications under the Gift Tax exclusion, where amounts given to individuals can be excluded from the taxable estate if they fall below the annual exclusion limit. In contrast, a grantor retained income trust, a grantor trust established by the decedent, and a grantor retained annuity trust involve the decedent maintaining some level of control or retained interest in the assets. These vehicles typically do not result in completed transfers to the beneficiaries because the grantor retains rights to certain benefits, which may include income generation from the assets. As a result, they might still be subject to the decedent's estate for tax purposes upon death.

The transfer of $5,000 to the decedent's son before death is regarded as a completed transfer concerning the decedent's estate because it represents an outright gift given during the decedent’s lifetime. Such gifts are considered completed since the decedent no longer retains any control or interest in the transferred asset once the gift is made. This transfer also aligns with tax implications under the Gift Tax exclusion, where amounts given to individuals can be excluded from the taxable estate if they fall below the annual exclusion limit.

In contrast, a grantor retained income trust, a grantor trust established by the decedent, and a grantor retained annuity trust involve the decedent maintaining some level of control or retained interest in the assets. These vehicles typically do not result in completed transfers to the beneficiaries because the grantor retains rights to certain benefits, which may include income generation from the assets. As a result, they might still be subject to the decedent's estate for tax purposes upon death.