Denzel recently transferred $1,000,000 to a trust. Denzel retained the right to receive an annuity of $50,000 each year for 10 years. Upon termination of Denzel’s annuity income interest, the trust will terminate and the assets will be transferred to Malcolm and Olivia. When Denzel created the trust, he made a completed gift of the remainder interest in the trust to Malcolm and Olivia. The present value of the $50,000 per year income stream that Denzel will receive is $350,000, and therefore the remainder interest in the trust is $650,000 ($1,000,000 initial funding - $350,000 income interest retained). Since Malcolm and Olivia had to wait to receive the gift (in this case, they had to wait 10 years), Denzel was able to generate a $350,000 temporal discount on the transfer for gift tax purposes. Denzel will have a taxable gift of $650,000 against which he could use some of his applicable gift tax credit.