Question

clarence transfers $500,000 of securities to an irrevocable trust, which is to pay him an income interest equal to five percent of the trust value determined each year for a term of 15 years. at the end of the 15 year term the remainder of the property shall pass to st. ophelia's hospital for children. this is an example of what kind of trust? a. a grantor retained income trust. b. a charitable lead trust. c. a charitable remainder unitrust d. a charitable remainder annuity trust

Answer 1

The type of trust described is a charitable remainder annuity trust, where the grantor receives a fixed income interest each year and the remaining assets pass to a charitable organization.

Step-by-step explanation:

The type of trust described in the question is a charitable remainder annuity trust.

In a charitable remainder annuity trust, the grantor transfers assets to the trust, and receives a fixed income interest each year, which is determined as a percentage of the initial value of the trust. At the end of the trust term, the remaining assets pass to a charitable organization, in this case, St. Ophelia's Hospital for Children.

Therefore, the correct answer is option d. a charitable remainder annuity trust.