Question:

TXX5767

Xavier is unmarried. At his death in 2009, Xavier's will be provided for the creation of a trust into which his entire estate was to be transferred ($7 mil. less $1,575,000 estate tax). The terms of the trust provide for Xavier's children to receive the income from the trust for as long as any of them still live. Upon the death of Xavier's last surviving child, the trust is to be terminated and distributed in equal shares to Xavier s surviving grandchildren, except that the trust would not be terminated until the youngest of Xavier s surviving grandchildren reached the age of 30. Because Xavier had not used any of his GST exemption during his lifetime, his entire GST exemption ($3.5 mil. in 2009) was automatically allocated to his testamentary trust at his death. When the last of Xavier s children died in 2015, the youngest grandchild was 25; therefore, the trust continued to hold the property for the benefit of the grandchildren for 5 more years. Determine the GST due, if any, at each of the following event dates.

1) Xavier's death, taxable estate is $7 million and his testamentary trust is funded in the amount of $5,425,000

2) The death of Xavier's last surviving child in 2015, when the trust was worth $10 million

3) When Xavier s youngest grandchild reached the age of 30 and the trust property was distributed to the grandchildren trust value at this time was $18.5 mil.

Select on the possible answers below.

A. $3.5 million.

B. None of the answers is correct. 

C. $2,800,000

D. $1,419,355 (allow for rounding)

E. $1,395,000

F. $990,000

G. $0

H. $2,000,000

I. $1,074,286