Aiden transferred $2 million to an irrevocable trust with income to Valeria for her life and the remainder to Jocelyn (or her estate). Calculate the value of the remainder and the life estate if Valeria's age and the prevailing interest rate result in a Table S discount factor for the remainder of 0.47.
What will be an ideal response?
The remainder value is $940,000 and the life estate value is $1,060,000.
The remainder is valued at $940,000 ($2 million × 0.47). Accordingly, the value of the life estate is $1,060,000 ($2,000,000 less $940,000).
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