Estate of Kohlsaat
United States Tax Court
T.C. Memo. 1997-212 (1997)
Lieselotte's irrevocable trust gave both her two adult children and sixteen grandchildren and great-grandchildren an unrestricted right to demand immediate distributions up to the $10,000 annual exclusion amount during a 30-day window after being notified, though none of the sixteen contingent beneficiaries ever exercised that right; the IRS (respondent) denied the sixteen claimed annual exclusions for the contingent beneficiaries, arguing they lacked present interests in the trust.
Whether, if a trust gives the beneficiaries unrestricted rights to demand immediate distributions from the trust property, gifts made to the trust for the benefit of the beneficiaries will qualify for the annual gift tax exclusion.