28. Charlie recently established an ILIT and transferred his life insurance policy with a death benefit of $1 million into the ILIT. Charlie named his wife Sarah and son Steven as a Crummey beneficiaries. As Crummey beneficiaries, each beneficiary is entitled to withdraw one-half of the contributions to the ILIT each year up to the greater of $5,000 or 5% of the ILIT assets (other than the $50,000 transferred to the trust each year to pay the premiums, the trust has no other assets with value). Charlie transfers $50,000 each year to the ILIT to pay the premiums and Charlie wants to reduce the gift tax value of the $50,000 premiums transferred to the trust each year and avoid Crummey lapses. What gifting technique is available to Charlie to reduce the taxable gift?

1. Annual Exclusion gifts of $2,500 for each beneficiary.
2. Annual Exclusion gifts of $5,000 for each beneficiary.
3. Annual Exclusion gifts of $15,000 for each beneficiary.
4. Annual Exclusion gifts of $25,000 for each beneficiary.

29. Hank is 80 years old. He wishes to name his younger sister Grace as the beneficiary of his retirement plan (and IRA). Which of the following statements is incorrect?

1. Hank can name Grace as a beneficiary, and the retirement assets will bypass probate and pass directly to Grace.
2. Distributions to Grace from the IRA will be subject to income tax.
3. Grace can create an inherited IRA and can take distributions based on her life expectancy.
4. Grace must withdraw the assets from the IRA within 10 years.

30. Teresa names her husband, Steve, as the primary beneficiary of her retirement plan (an IRA) and her children as the contingent beneficiaries of the IRA. Which of the following statements is not true with respect to her husband Steves options for taking distributions from the IRA?

1. Steve may create a rollover IRA and defer distributions to age 72.
2. Steve may create an inherited IRA and take distributions over his life expectancy.
3. Steve can avoid income taxes on distributions from the IRA if he takes the assets out within 10 years.
4. Steve can disclaim his interest in the IRA and the children will be the beneficiaries of the IRA.