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American College HS330 Exam - Topic 1 Question 119 Discussion

Actual exam question for American College's HS330 exam
Question #: 119
Topic #: 1
[All HS330 Questions]

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

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Suggested Answer: B

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

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Teresita
9 hours ago
I think both powers could lead to inclusion in the estate.
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Jaclyn
6 days ago
The power to add principal definitely affects the estate.
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Dorthy
11 days ago
The grantor should have just named his dog as the trustee. Then the IRS would never find it!
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Shantell
16 days 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
21 days 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
26 days 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
1 month 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
1 month 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
1 month 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
2 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
2 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
2 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
2 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
2 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
3 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
3 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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Darnell
3 months ago
Hmm, this seems like a tricky one. I'll need to think carefully about the implications of the grantor retaining certain powers over the trust.
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Shelba
2 months ago
This is definitely tricky! The powers can really affect tax implications.
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Tomoko
3 months ago
I lean towards both powers being includible.
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