Question

Jose is subject to the top marginal Federal income tax rates. Carlita is considering establishing a trust in which Jose would be an income beneficiary. Considering only income tax consequences, Jose should be designated as:

Answer 1

Second tier beneficiary

Step-by-step explanation:

Since Jose probably doesn't need the money right now, he would probably benefit from being a second tier beneficiary since the distributions for second tier beneficiaries are discretional, meaning that they can happen or not depending on the circumstances. For example, if Jose doesn't need the money this year, he can postpone the cash payment.