A married couple have written a will that leaves part of their money to a trust fund. The income from this trust will benefit the surviving spouse until death, with the principal then going to their children. Why was the trust fund created?To reduce the estate of the surviving spouse and, thus, decrease the total amount of estate taxes to be paid by the couple.To ensure that the surviving spouse is protected from lawsuits filed by the couple’s children.To give the surviving spouse discretion over the ultimate use of these funds.To maximize the earning potential of the money because trust funds generate more income than other investments.

A trust is created by the grantor to convey his/her assets to a trustee who takes the possession and…

Answered: A married couple have written a will…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A married couple have written a will that leaves part of their money to a trust fund. The income from this trust will benefit the surviving spouse until death, with the principal then going to their children. Why was the trust fund created?

To reduce the estate of the surviving spouse and, thus, decrease the total amount of estate taxes to be paid by the couple.
To ensure that the surviving spouse is protected from lawsuits filed by the couple’s children.
To give the surviving spouse discretion over the ultimate use of these funds.
To maximize the earning potential of the money because trust funds generate more income than other investments.

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