In 2001, Nolan (age 65) creates a trust with stock worth $2.5 million. Under the terms of the trust, Nolan retains a life estate with the remainder passing to Margaret (age 40) upon his death. In the month the trust is created, the appropriate interest rate is 7.8%.
a. Determine the amount of Nolan's gift. Of his taxable gift.
b. Would your answers change if Margaret is Nolan's wife? Explain.