Estate Planning Final Exam

Which of the following is NOT a Will substitute? A. Joint Tenancy with right of survivorship titling. B. Community Property held by spouses (an equal undivided interest). C. An investment account with a TOD designation. D. An insurance policy with a named beneficiary.

Solution: The correct answer is B. All are Will substitutes except for the decedent's half of community property because each of the others provides for transfer of assets without probate.

Of the following statements, which is false? A. The unlimited marital deduction merely postpones the potential estate tax due. B. Property that is not included in the decedent's gross estate cannot qualify for the unlimited marital deduction. C. The death benefit of a life insurance policy included in a decedent's gross estate is not eligible for the unlimited marital deduction. D. An individual can use the unlimited marital deduction during life to fund the surviving spouse's applicable estate tax credit. The best property to transfer is the property that is expected to appreciate in value.

Solution: The correct answer is C. Answer "C" is a false statement. If the death benefit of a life insurance policy is included in a decedent's gross estate, the value of the death benefit will be eligible for the unlimited marital deduction. All of the other answers are true statements.

This is an oral expression of testamentary intentions restricted to tangible personalty: A. A last expression of wishes. B. A holographic will. C. A nuncupative will. D. A dying declaration.

Solution: The correct answer is C. Answer "C" is an oral will with two witnesses which is valid in some states, and not in others. Usually only includes personalty assets, not realty.

Which of the following accurately reflect characteristics of a Grantor Retained Annuity Trust (GRAT)? I. The trust must be irrevocable. II. The trustee has no discretion to withhold annuity payments from the grantor. III. Additional contributions may be made to the trust after the inception. IV. The value of the assets in a GRAT will be included in the grantor's gross estate if the grantor dies prior to the end of the trust term. A. I and IV only. B. I, III and IV only. C. I, II and IV only. D. I, II, III and IV.

Solution: The correct answer is C. No additional contributions can be made to GRAT.

Some estate planning can occur after death (post mortem). Some post mortem techniques or tools require an executed document prior to death. Which of the following is effective without a previously executed document that is enforceable after death? I. QTIP property election to qualify for the marital deduction. II. Section 303 stock redemption election. III. Election to waive the personal representative fees. IV. Election by the personal representative to use a credit shelter trust. A. I and III only. B. I, II and III only. C. II and III only. D. I, II and IV only.

Solution: The correct answer is C. Statement "II" is based solely on the percentage of business value to total estate and the company E and P account. Statement "III" is accomplished by the representative simply signing a waiver of fees (a disclaimer). All others must be established prior to death to be available to the personal representative on an optional basis. While the QTIP election is made by the executor the decedent must have a properly directed and executed will to leave property in a qualifying way in a QTIP. A credit shelter trust has to be provided as well, either as a standby trust or testamentary trust. Funding may be at the discretion of the executor but the trust must be in writing.

Which statement(s) is/are true for Generation Skipping Transfer Tax (GSTT)? I. Applies to transfers to persons who are two generations or more lower than the transferor. II. There are no exceptions. III. There is an $12.920,000 lifetime exemption in 2023 for GST Transfer. IV. Transfers qualifying for gift tax annual exclusion are excluded from GSTT. A. Choose the answer(s) which is/are most correct: B. I and IV only. C. II and III only. D. I, III and IV only. E. IV only.

Solution: The correct answer is C. There are exceptions to the GSTT including the predeceased parent rule. Gifts qualifying for the annual gift tax exclusion are excluded for GSTT. The lifetime exemption for GSTT is $12.920M (2023).

Emil LaBelle has a small business and many investment assets accumulated over the years. The best thing you can recommend as his financial planner is to: A. Recommend he use a living trust to avoid probate. B. Suggest he use insurance to add liquidity to the estate. C. Gather information from Emil regarding his assets and goals. D. All of the above.

Solution: The correct answer is C. Without knowing more about the assets and client goals (Answer "C"), all other choices (Answers "A" and "B") would be premature.

Claude decides to prepare his will, but does not want to seek the help of an attorney. Claude handwrites, signs and dates all of the provisions of the will but does not have it witnessed by anyone. What type of will does Claude have, if any? A. None. B. Nuncupative. C. Self-Prepared. D. Holographic.

Solution: The correct answer is D. A holographic will is one that is handwritten, signed and dated. Answer "B" is incorrect because a nuncupative will, which is not valid in all states, is an oral will. Answer "C" is incorrect because there is no category "self-prepared."

Which of the following are characteristics of a qualified disclaimer? I. It may not redirect the bequest to another person selected by the disclaimant. II. It must be received by the executor of the estate within 9 months of the death of the decedent. III. It must be written and irrevocable. IV. The disclaimant may disclaim a part of an asset. A. I and II only. B. I, II and III only. C. I, III and IV only. D. I, II, III and IV.

Solution: The correct answer is D. A qualified disclaimer must be written, irrevocable and received by the executor of the estate within 9 months. It must not direct the asset and can be for any interest partial or full.

A tenancy by the entirety may be terminated in which of the following ways? I. Death, whereby the survivor takes the entire tenancy. II. Mutual agreement. III. Divorce, which converts the tenancy into a tenancy in common or a joint tenancy. IV. Severance, whereby one tenant transfers his or her interest to a third party with or without the consent of the other tenant. A. I and II only. B. I and III only. C. II and IV only. D. I, II and III only. E. I, II, III and IV.

Solution: The correct answer is D. In a tenancy by entirety, the interest of one spouse cannot be terminated or severed without the consent of the other spouse.

Jackie and Julie have been in a long-term non-traditional relationship. Jackie wants to make sure that if she dies first, Julie will be provided for. Which of the following would you recommend to fulfill Jackie's goal of transferring assets to Julie at Jackie's death? A. Name Julie as the beneficiary of Jackie's retirement plan. B. Transfer the ownership of Jackie's real estate investments into Tenancy by the Entirety. C. Advise Jackie to write a will that specifically bequeaths assets to Julie. D. Recommend that Jackie and Julie move to a community property state.

Solution: The correct answer is A. Answer "B" is incorrect; Jackie and Julie cannot own property in a tenancy by the entirety because they are not married. Answer "C" is correct but is challengeable in probate; Jackie should write a will that specifically bequeaths property to Julie if she wants Julie to have that property. Answer "D" is incorrect; even if Jackie and Julie moved to a community property state, they would not be subject to the community property regime because they are not married.

Which of the following items will be retitled through probate? A. A house subject to a mortgage and owned fee simple by the decedent. B. 1/2 of real estate held tenancy by the entirety. C. Bank accounts with a POD designation. D. None of the above will be retitled through probate.

Solution: The correct answer is A. Answers "B" and "C" will not pass through probate because they pass by operation of law or state contract law. Answer "A" will pass through probate because it is owned fee simple by the decedent. The fact that the house is subject to a mortgage does not affect whether it passes through probate.

Harry died this year. Which of the following property items are included in his gross estate? I. His rings and watches, valued at more than $45,000. II. Cash of $250,000 that he gave to a friend in 2008. No gift tax was paid on this transfer. III. Stock that Harry purchased and held with his brother in a joint tenancy with right of survivorship. A. I and III only. B. II and III only. C. I only. D. I, II and III.

Solution: The correct answer is A. Both statements "I" and "III" are includible in the gross estate. Statement "II" is not included in the gross estate because it was a completed gift, but to the extent it was a taxable gift it would be included in the adjusted taxable estate.

Your client, Zoe, has established a revocable grantor trust, naming a bank as the trustee. Pursuant to the terms of the trust document, your client receives all the income annually generated by the trust assets during her life. The assets placed into the trust consist of Zoe's mutual fund portfolio, her personal residence, a rental property located in another state, and two installment notes held by Zoe. Upon your client's death, all of the assets remaining in the trust are to be distributed to Zoe's two children. Upon Zoe's death, the assets remaining in the trust will: I. Be included in Zoe's gross estate. II. Be subject to the probate process. III. Receive a new income tax basis equal to the fair market value at death or her alternate valuation date if properly elected. IV. Be distributed as directed by Zoe's will. A. I only. B. I and III only. C. I, II and III only. D. I, II, III and IV.

Solution: The correct answer is A. Grantor trusts do not remove assets from the grantor's gross estate, but do allow assets to pass outside of probate. Installment notes are IRD property and therefore do not get a step to fair market value. The trust document will determine how the assets are distributed, not the will.

Which of the following tasks are the primary responsibilities of the personal representative? I. Inventory the estate. II. File income tax returns for all beneficiaries. III. Contest payment of all debts of the estate. IV. Probate the will. A. I and IV only. B. II and III only. C. II and IV only. D. I, III and IV only. E. I, II, III and IV.

Solution: The correct answer is A. The beneficiaries file their own returns and all legitimate debts are paid without contest.

Which of the following is not a characteristic of a testamentary trust? A. Is created under a last will and testament. B. It shifts the income tax burden to a lower-bracket taxpayer. C. The assets are included in the gross estate. D. It is included in probate.

Solution: The correct answer is B. All of the other answers are characteristics of a testamentary trust.

Jack Hammet and his wife, Janet, were in an auto accident. Janet died three weeks before Jack did. His gross estate was $13.5 million. One of the major assets in his estate was closely held stock in an equipment leasing firm (C corporation) with which rapidly appreciating equipment was purchased. His estate had unsecured debts of $400,000 and administrative expenses of $75,000. His will allocates his estate to his children in equal shares. Which post mortem planning techniques might benefit Jack's estate? I. The alternative valuation date. II. A Section 303 stock redemption. III. The QTIP election. IV. Special use valuation. V. Installment payment of estate taxes. A. III only. B. II and V only. C. IV and V only. D. I, III and IV only.

Solution: The correct answer is B. Due to rapid increase in asset value, statement "I" would likely provide a higher estate value and therefore the alternate valuation date is not likely useful. Statement "III" - QTIP is not an issue as Janet and Jack both died, and she is not his heir; therefore, there is no use for a QTIP. Finally, special use valuation pertains to real property used in a trade or business.

Laurie and Chance are considering purchasing a piece of land on which they plan to build a vacation home. Laurie and Chance are engaged to be married, so they are unsure of how they should title the property. Which of the following statements is correct regarding their ownership and titling of the land? Laurie and Chance cannot own the property as joint tenants until they are married because joint tenancies may only be established between spouses. If Laurie and Chance were married and owned the property as community property, one-half of the value of the property will be included in the probate estate of the first spouse to die without regard to the contribution of each spouse. If the property is held as a joint tenancy then Laurie and Chance may own different fractional interests in the property regardless of how much they contribute. If the property is held as a joint tenancy with right of survivorship and Chance dies first, the property will pass to Laurie unless Chance's will directs a different disposition.

Solution: The correct answer is B. Joint tenancy requires equal ownership therefore "C" is incorrect. Answer "A" is incorrect because joint tenancies may be established by spouses or nonspouses. Answer "B" is correct because if the two were married, each would be deemed to have contributed 50%, therefore only 50% would be included in the probate estate of the first spouse to die. Answer "D" is incorrect because if the property is held as a joint tenancy then the property will transfer automatically at the first tenant's death, regardless of what the will dictates.

As the personal representative for the Kazinski estate, your client must or may do the following: I. Defend the estate against creditor claims. II. Hold all income from the estate until all claims have been resolved. III. Favor a certain beneficiary over others. IV. Enhance the value of the estate properties, if possible. A. IV only. B. I and IV only. C. II and III only. D. I, II and III only.

Solution: The correct answer is B. Statement "I" is accurate if a creditor's claims should not be paid because it is illegitimate. The personal representative cannot withhold income from the estate, so statement "II" is incorrect. The personal representative cannot favor any beneficiary over another beneficiary, so statement "III" is incorrect.

Before her death, Karston Williams, age 74 gave her three grandchildren some money for their private school education. She paid $18,000 directly to the school for Jack's tuition and gave the same amount of cash to Sienna and Nancy. What would be the adjusted taxable gifts calculated in her estate if any assuming she had made no previous taxable gifts and that she died this year? A. $0 B. $2,000 C. $3,000 D. $34,000

Solution: The correct answer is B. The amount of tuition paid directly to the institution is a qualified transfer not subject to the gift tax regime, but the $18,000 given directly to each of her other two grandchildren represents an excess of $1,000 each above the $17,000 per person annual exclusion allowance ($2,000).

Which of the following are characteristics of a private annuity? I. Title to the property is conveyed to the individual responsible for making annuity payments at the time of the transaction. II. It involves a promise on the part of the individual receiving the property to make an annuity payment to the transferor, usually secured by the transferred property. III. The individual responsible for making annuity payments can deduct the interest portion of those payments. IV. Each payment received by the annuitant is divided into gain, interest income, and a non-taxable recovery of basis. A. I and II only. B. I and IV only. C. II, III and IV only. D. I, III and IV only.

Solution: The correct answer is B. The private annuity cannot be secured by the transferred property and the interest portions of payments to the annuitant cannot be deducted by the transferee.

Which of the following is true regarding a Grantor Retained Annuity Trust (GRAT)? A. At the end of the GRAT term, a taxable gift occurs. B. If the grantor dies during the trust term, a pro rata portion of the trust assets are included in the grantor's estate. C. Interest and dividends earned by assets in a GRAT are taxed to the grantor. D. If the grantor survives the trust term, all of the trust assets will be included in the grantor's estate.

Solution: The correct answer is C. Answer "A" is incorrect because a taxable gift occurs when the GRAT is established, not when the GRAT term ends. Answer "B" is incorrect because if the grantor dies during the trust term, all of the trust assets are included in his gross estate. Answer "D" is incorrect because if the grantor survives the trust term, none of the trust assets are included in his estate.

Which of the following statements regarding SCINs is correct? A. If the seller outlives the SCIN term, the buyer has paid no more than the FMV. B. The payments received by the seller under a SCIN are treated as interest income. C. A SCIN can give the seller a collateral interest in the property sold. D. If the seller dies before the end of the SCIN term, the seller is deemed to have made a taxable gift to the buyer equal to the difference between the payments made and the total principal payments due on the SCIN.

Solution: The correct answer is C. Answer "A" is incorrect because the buyer of a SCIN pays the FMV plus the SCIN premium. Answer "B" is incorrect because each payments received by the seller consists of (1) interest income, (2) capital gain, and (3) return of adjusted basis. Answer "D" is incorrect because the transferee bought the right to cancel thus no gift.

In the current year (2023), George made taxable gifts to his two sons. One was for $500,000 to his son Chris and another was to his son Alex for $500,000. George's wife, Lois died several years ago. George used his applicable credit amount to offset any gift tax liability, and would like to know how much applicable gift tax credit does he have left at this time? A. $345,800 B. $1,000,000 C. $4,768,000 D. $11,920,000

Solution: The correct answer is C. George gave $1,000,000 in the current year in taxable gifts so he has $11,920,000 of remaining exemption left which translates to a $4,768,000 credit ($5,113,800 - $345,800). There is no indication from the statements that he has any portability from his deceased wife. Choice "A" is the credit equivalency, not the credit. Taxable gifts is a term of art meaning net of any annual exclusion. Note: the $345,800 is from the estate tax table. It is the calculated tax due on 1 million dollars of gift or estate amounts.

Johnny Apfel owns an orchard which is rapidly increasing in value due to expansion of the nearby city. He asks if retitling the orchard property as Tenants in Common with his four children makes sense from an estate and gift tax point of view. He expresses the following priorities for his estate plan: reduce probate, maintain control of assets, and reduce gift and estate taxes. Which of the following would be factors in the decision to retitle the property: I. A disadvantage is that children's creditors could have a claim on part of the orchard. II. An advantage is that a portion of the future appreciation will be shifted out of his estate. III. An advantage is that probate will be reduced by automatically transferring his remaining interest to surviving tenants in common. IV. A disadvantage is that all tenants in common must have the same share in the property. A. I and III only. B. II and IV only. C. I and II only. D. I, II and IV only.

Solution: The correct answer is C. Tenancy in common allows for different percentages of ownership for different co-tenants. A decedent's share of the tenants in common property will be probated. Tenants in common titling does not provide for automatic retitling.

David would like to fund a charitable trust and name himself as the income beneficiary. He would like for his payout from the trust each year to be equal. Given David's desires, which type of charitable trust should David establish? A. A Charitable Lead Annuity Trust. B. A Charitable Lead Unitrust. C. A Charitable Remainder Annuity Trust. D. Charitable Remainder Unitrust.

Solution: The correct answer is C. The Charitable Remainder Annuity Trust would be the best option because the charity is the remainder beneficiary and David would be the income beneficiary. The CRAT is a better option than the CRUT because the payout from the CRAT would be a fixed dollar amount, rather than a fixed percentage. David wants a stable payout each year which would lead us to a fixed dollar amount, and thus the CRAT.

A qualified disclaimer requires all of the following, except: A. It must be in writing. B. It must be irrevocable. C. It must select the ultimate beneficiary. D. It must be made before any benefits are received from the disclaimed assets

Solution: The correct answer is C. The disclaimant cannot select the ultimate beneficiary. Otherwise, he or she is still deemed to retain ownership, rendering disclaimer invalid.

Which of the following statements accurately describes a QTIP (qualified terminable interest property) trust? A. A QTIP may have multiple beneficiaries of the income interest as long as the principal beneficiary is the surviving spouse. B. The QTIP is permitted to accumulate income. C. The surviving spouse must have a general power of appointment over the trust assets. D. The trustee may have the power to invade the corpus for the spouse for an ascertainable standard.

Solution: The correct answer is D. A QTIP trust qualifies for the unlimited marital deduction. It does not give the spouse an unlimited general power. A QTIP trust must distribute income annually only to the surviving spouse. Only one beneficiary is permitted in a QTIP trust in order to qualify for the marital deduction. The trustee may have the power to invade for the HEMS of the spouse only.

Which of the following elements are required in a valid trust? I. Grantor (a.k.a. Settlor or Trustor) having an intent to create a trust. II. Trustee who holds legal title to all assets in the trust. III. Beneficiary (or beneficiaries) who hold(s) equitable title to the assets. IV. Property in the Trust (called corpus, res, or principal) V. A fiduciary relationship between the trustee and the beneficiary(ies). A. I, II and IV only. B. I, III and IV only. C. I, II, III and IV only. D. I, II, III, IV and V.

Solution: The correct answer is D. All are requirements for a valid trust.

Which of the following accurately describes Community Property: I. Is available only to legal and lawful spouses. II. Property acquired during marriage by either spouse's industry is community property. III. Community property cannot be transferred without the consent of all community property owners (except at death in some states). IV. Property acquired by gift or inheritance during marriage is generally not community property. A. I and IV only. B. I and II only. C. I, III and IV only. D. I, II, III and IV only.

Solution: The correct answer is D. All statements accurately describe community property. Property acquired by gift or inheritance, unless commingled with community property, is generally the separate property of the recipient.

Which of the following statements is incorrect? A. When a decedent's taxable estate is less than the applicable estate tax credit equivalency because of the overuse of the marital deduction, the estate is said to be overqualified. B. When too few assets pass to a decedent's surviving spouse, and as such the decedent's taxable estate is greater than the applicable estate tax credit equivalency, the decedent's estate is said to be underqualified. C. An ABC Trust arrangement utilizes a General Power of Appointment Trust, a QTIP Trust. and a Bypass Trust to maximize the use of a decedent's applicable estate tax credit. D. The ultimate beneficiary of a QTIP Trust is selected by the surviving spouse.

Solution: The correct answer is D. Answer "D" is incorrect because the ultimate beneficiary of a QTIP Trust is chosen by the grantor of the QTIP Trust. All of the other statements are correct.

The Generation Skipping Transfer Tax (GSTT) has all the following characteristics, except: A. GST outright gifts qualifying for the annual exclusion are not subject to the tax. B. Assets transferred to a trust that has a grandchild as the sole beneficiary may be subject to both gift and generation skipping transfer tax. C. If all of the beneficiaries of a trust are grandchildren (whose parents are living) of the grantor then the trust is subject to GSTT. D. A "skip person" is a person who is one or more generations younger than the grantor.

Solution: The correct answer is D. Answers "A" through "C" are true, but in the case of "D," a grandchild whose parent has died moves up a generation with regard to skip-person considerations. A skip beneficiary is generally a person who is two or more generations younger than grantor.

Colin would like to use his recent inheritance of $200,000 to establish a charitable remainder trust. Colin would like to have some income and the flexibility to make additional contributions to the charitable remainder trust in the future. Which of the following would you recommend for Colin? A. CRAT. B. PIF. C. CLUT. D. CRUT.

Solution: The correct answer is D. Each piece has to fit. He wants to benefit from a stream of income now and leave the remainder to the charity and he wants to be able to make additional contributions. A CRAT meets the first 2 requirements but not the third as you cannot make additional contributions (it will mess up the "annuity" of the CRAT). A CLUT meets the last requirement in that a Unitrust (whether CRUT or CLUT) allows for additions since the distribution is based on account value each year but does not meet the first 2 requirements (the charity gets the income stream and a noncharity gets the remainder). A PIF meets all the requirements except that it is not a charitable remainder trust. The charity provides a stream of income, the remainder is left to the charity and Colin could make additional contributions. A CRUT meets these requirements.

Which of the following accurately describes a Will substitute? A. Property passes outside of probate. B. A will substitute is open to the public. C. A will substitute permits testamentary control of the distribution of assets. D. A will substitute can be "overridden" by a specific bequest.

Solution: The correct answer is A. A Will substitute avoids public scrutiny, testamentary control, and cannot be overridden by bequests. An example might be a contractual agreement as a life insurance beneficiary.

Which of the following is not a principal reason for establishing a revocable living trust? A. Reducing the grantor's gross estate. B. Grantor trust income tax treatment. C. Probate Avoidance. D. Management of assets.

Solution: The correct answer is A. A revocable living trust is primarily established so that the trust assets avoid the probate process and provides for management of assets and grantor trust income tax status. The trust assets will transfer per the trust document and will not need to pass through probate. A revocable living trust does not reduce a grantor's gross estate. The assets of a revocable living trust are included in a grantor's gross estate at the fair market value at the grantor's date of death.

All of the following are included in the gross estate except: A. Proceeds from a life insurance policy owned by the decedent insured that was assigned to an ILIT two years before death of the insured. B. A CRAT where the income beneficiary was the decedent. C. Property where the decedent had a reversionary interest of less than 10% of the value. D. Gift taxes paid two years prior to the decedent's date of death for gifts made four years earlier.

Solution: The correct answer is D. Incidence of ownership of life insurance policies assigned within three years of death are includible in the decedent's estate, as are CRATs and CRUTs. Any amount subject to the gross up rule is includible in the taxable estate but must be for gifts made within three years of death. Gift taxes paid on gifts made within 3 years of death must be added back to the gross estate but if the gift tax paid is on an older gift, it does not get added to the gross estate.

To qualify for the marital deduction, qualified terminable interest property (QTIP) must meet which of the following conditions? I. The surviving spouse must have a general power to appoint the property. II. All of the income must be paid out either to the surviving spouse or to the children of the decedent and the surviving spouse at least annually. III. The executor must make the QTIP election. IV. The surviving spouse must be entitled to make lifetime gifts to family members directly from the QTIP. A. I, II and III only. B. I and III only. C. II and IV only. D. III only.

Solution: The correct answer is D. The surviving spouse generally has no dispositive powers in a QTIP trust. The surviving spouse must be the SOLE income beneficiary who must receive ALL income from the trust at least once each year for the rest of his/her life.

A tenancy by the entirety may be terminated in which of the following ways? I. Death, whereby the survivor takes the entire estate. II. Mutual agreement. III. Divorce, which converts the estate into a tenancy in common or a joint tenancy. IV. Severance, whereby one spouse transfers his or her interest to a third party but requires the consent of the other spouse. A. IV only. B. I and III only. C. II and IV only. D. I and IV only. E. I, II, III and IV.

Solution: The correct answer is E. Tenancy by entirety cannot be terminated without the consent of the other spouse, death, or court intervention (divorce).

Which of the following properties or assets must go through probate? I. A residence held tenancy by the entirely with a spouse. II. Real property held in one spouse's name that is considered quasi-community property in the decedent's state of domicile. III. An automobile titled tenants in common. IV. An IRA with a named beneficiary. A. I and II only. B. III and IV only. C. I and III only. D. II and IV only. E. II and III only.

Solution: The correct answer is E. Tenancy by entirety is a JTWROS between spouses and does not require probate. An IRA with a named beneficiary is a contractual arrangement and does not need probate.

Which of the following would meet the requirements for the annual exclusion under the gift tax rules? A. A gift to a trust, to be distributed to a beneficiary contingent upon the beneficiary's survivorship. B. A gift to a trust that has an ascertainable value at the time of the gift. C. A gift to a secular (not a 2503c trust) trust that does not require annual income distribution to the beneficiary. D. A gift to a trust where the grantor can benefit from current income.

This answer represents a present interest. All of the other choices are a "future interest." Keep in mind that the 2503c trust for minors would qualify for the annual exclusion because any gift to such a trust is deemed to be a gift of a present interest. However, a regular secular trust that does not require any annual income distribution to the beneficiary will not qualify as a gift of a present interest.