One of the most useful estate planning mechanisms for substantial estates is the irrevocable inter vivos trust. Such a trust might provide that all the income from the trust property be paid to the donor's wife (or child) for life with the income beneficiary having a power of appointment by will limited as to objects so as not to cause the trust property to be includible in her estate for federal estate tax purposes. In addition, the trustee might be given discretion to distribute corpus to or for the benefit of the income beneficiary either (a) in the trustee's absolute discretion, (b) according to a standard relating to the beneficiary's health, maintenance, support or education, or (c) according to a broader standard, such as the beneficiary's benefit, comfort, welfare or happiness. A somewhat varied form of trust might provide that the trustee .may in his discretion distribute income and corpus to or for the benefit of the primary beneficiary (donor's child), the primary beneficiary's spouse, issue and spouses of issue. The primary beneficiary might be given a limited power to appoint by will, in default of the exercise of which the trust continues for the other beneficiaries.
Mason Walsh Jr.,
The Irrevocable Inter Vivos Trust: Income and Estate Tax Consequences to the Donor and the Trustee,
Duq. L. Rev.
Available at: https://dsc.duq.edu/dlr/vol4/iss2/4