Client is funding an irrevocable income trust. We discussed funding options and the happy medium from a risk standpoint was 60% stocks and 40% fixed index annuity to replicate bond exposure and capital preservation. Also, to hold any gains in the annuity until the grantor ( RL) wants to draw income. Trust says grantor SHALL withdraw income quarterly. Guidance from attorney is she doesnt need to generate income ( and doesnt want to) but the plan is to hold the annuity gains until trustee takes a distribution of any gain, which would be then taxed as income and can be distributed to grantor RL and she would pay income at her rate ( low) Total trust is about 300k. Question is would an Irrevocable income trust be allowed to hold gains in the FIA. I am getting conflicting advice. My thought was if the $120k grows to 150k and grantor decides she needs income, the trustee can draw out gains and that would then be taxed, but if it is annually taxed given it is a non natural owner, then this wouldnt make much sense.

Irrev Income trust would be the owner of the annuity, son is the trustee, bene is the same trust as ownership. Per attorney.

Thanks in advance.