Annual exclusions to reduce the gift tax

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Bernice established a trust for her son Val and her grandson Hunter with $5.5 million. Val will receive the income for life and Hunter will receive the corpus at his father's death. Bernice did not have any remaining GST exemption available to allocate to this trust. Which of the following statements is correct?

Select one:

a. Bernice could not take annual exclusions to reduce the gift tax and the GST tax for the gift to Hunter when the trust was established.

b. When the trust terminates, Val's estate must pay the GST tax.

c. The GST tax paid at the time of a taxable termination is tax exclusive.

d. The trust property is included in Val's gross estate.

Reference no: EM131318649

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