In which of the following situations will the grantor trust rules apply?
A)The trust is revocable and mandates the distribution of income to the named beneficiary.
B)The trust is irrevocable, and the trustee, who is also the grantor, has the power to distribute or accumulate income for the named beneficiary.
C)The trust is irrevocable, the income must be paid out currently, and the trust assets will revert to the grantor at the end of nine years.
D)The grantor trust rules will apply in each of the situations.

Question

Quizplus · Accepted Answer

The grantor trust rules apply in all of the situations listed. In situation A, the trust is revocable, so the grantor retains control over the assets and their income. In situation B, the trustee is also the grantor and has the power to distribute income, which means the grantor retains control over the trust. In situation C, the grantor retains the right to receive the assets back after nine years, so the trust is considered incomplete and the grantor trust rules apply.

In Which of the Following Situations Will the Grantor Trust