Client as settlor just entered into a trust agreement with bank as trustee, funding trust with $120,000.00 in cash. Trust provides for all income to be paid out at least annually to clients 18- year-old son, who is just starting a four-year college program, for his education and living expenses away at school. Trustee may use principal if income is insufficient for the college expenses. After son graduates from college, income is to continue to be paid to son at least annually, but trustee is without authority on its own to thereafter distribute any principal until son reaches 25 years of age. At that time, trustee is directed to distribute to son one-third of principal that is then in trust on sons 25th birthday, one-half of the then principal to son on sons 30th birthday, and all the then remaining principal to son on sons 35th birthday. At all times son is to continue to receive all income of trust at least annually. Client has power to accelerate distributions of principal to son during clients lifetime.

What are the income, gift and estate tax consequences of the trust arrangement during the lifetime of the client and upon the clients death, which occurs on the sons 30th birthday. Explain your answer.