American College HS330 Exam - Topic 1 Question 119 Discussion

Actual exam question for American College's HS330 exam

Question #: 119
Topic #: 1

A man established and funded an irrevocable trust and named a bank as trustee. All income from the trust is to be paid to his four grandchildren. Which of the following powers retained by the grantor of the trust will cause all or a portion of the trust assets to be includible in his gross estate for federal estate tax purposes?

1. The power to add principal to the trust

2. The power to vary the amounts of trust income paid to each grandchild

Al only

BII only

CBoth l and II

DNeither I nor II

Show Suggested Answer

Suggested Answer: B

by Chauncey at Nov 25, 2025, 12:31 PM

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Reena

3 months ago

I feel like the trust is solid. Option B could be a possibility too.

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Edmond

3 months ago

I think D makes sense. Neither power should affect the estate.

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Alyssa

3 months ago

Why A? The power to add principal seems risky for estate tax.

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Skye

3 months ago

I’m not so sure. I feel like option A could be the answer.

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Melvin

3 months ago

I agree, both powers seem significant.

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Lyda

3 months ago

I think it's tricky. I lean towards option C.

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Alecia

4 months ago

It's all about control; the grantor's powers can complicate things!

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Willard

4 months ago

Wait, I thought irrevocable trusts were completely out of the estate?

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Nickolas

4 months ago

I disagree, I believe only the first one matters here.

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Teresita

5 months ago

I think both powers could lead to inclusion in the estate.

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Jaclyn

5 months ago

The power to add principal definitely affects the estate.

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Dorthy

5 months ago

The grantor should have just named his dog as the trustee. Then the IRS would never find it!

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Shantell

5 months ago

Haha, the grantor should have just put the trust in a offshore account and called it a day. Problem solved!

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Shenika

5 months ago

Neither power would cause the assets to be included. The trust is irrevocable, so the grantor has no control over it.

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Ronna

5 months ago

Both powers would cause the assets to be included in the grantor's estate. Seems pretty straightforward to me.

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Selma

6 months ago

I remember discussing how irrevocable trusts work, but I’m confused about how these specific powers play into estate tax. I need to think more about the implications of each option.

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Shawn

6 months ago

I’m leaning towards option A, but I’m not confident. I recall something about how varying income distributions might not trigger estate tax inclusion.

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Claribel

6 months ago

This question seems similar to one we practiced where the grantor's powers affected estate tax inclusion. I feel like both powers could be problematic.

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Margurite

6 months ago

I think I remember that retaining the power to add principal could lead to inclusion in the gross estate, but I'm not entirely sure about the income variation power.

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Nohemi

6 months ago

This question is testing our knowledge of the rules around irrevocable trusts and estate tax. I'll need to review the relevant tax laws to determine the correct answer.

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Carman

6 months ago

I'm a bit confused on this one. I know it has to do with the grantor's retained powers, but I'm not sure which specific powers would trigger estate tax inclusion.

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Bok

7 months ago

I think the power to vary the amounts of trust income paid to each grandchild is the key here. That's gotta be the right answer.

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Milly

7 months ago

The power to add principal to the trust would definitely cause the assets to be included in the grantor's estate. That's a no-brainer.

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Adelina

7 months ago

I feel pretty confident about this one. The powers mentioned in the question are the key factors to consider in determining estate tax inclusion.

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Oliva

8 months ago

Okay, I think I've got this. The key is understanding which powers would cause the trust assets to be included in the grantor's estate for tax purposes.

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