Tia funds an irrevocable trust with $100,000, naming Vonda to receive income for life. Tia also grants Vonda a general power of appointment during her life. During the next year, Vonda directs the trustee to give $100,000 to Rick. Which of the following statements is not correct?

Question

Quizplus · Accepted Answer

Tia made a $100,000 gift to the trust, not to Rick. It is Vonda who made a gift to Rick by directing the trustee to distribute the money. Tia's original gift to the trust established the funds that Vonda could later direct to Rick. Exercising a general power of appointment does constitute a gift, as Vonda is effectively transferring the assets to the person she designates (in this case, Rick).

Tia Funds an Irrevocable Trust with $100,000, Naming Vonda to Receive