Franklin established an irrevocable trust with $60,000. He named his daughter Lucinda the beneficiary of the trust and gave her a noncumulative right to withdraw the greater of $5,000 or 5% of trust corpus each year. What is the gift tax consequence if Lucinda does not withdraw money from the trust this year?
a. An annual exclusion is not available to Franklin to offset this taxable gift.
b. Franklin has an annual exclusion of $14,000 available to offset this taxable gift.
c. Lucinda will not make a taxable gift if she lets her withdrawal right lapse.
d. Lucinda must use her unified credit to offset the gift tax on the lapsed portion of the gift.