Is a marital trust the same as a QTIP?

QTIP Trusts function almost the same as Marital Trusts. They're both irrevocable trusts that can only name the surviving spouse as beneficiary during that spouse's lifetime. However, the major distinction between the two is that with a QTIP Trust, the grantor of the trust maintains control of it, even after death.

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Inter Vivos QTIP Trust with Principal to Donor's Children on Spouse's...

Clark Nevada Inter Vivos QTIP Trust with Principal to Donor's Children on Spouse's Death

Name: Clark Nevada Inter Vivos QTIP Trust with Principal to Donor's Children on Spouse's Death
Brand: US Legal Forms
Rating: 4.56 (369 reviews)

Category:

Trusts - QTIP

State:

Multi-State

County:

Clark

Control #:

US-02630BG

Format:

Instant download

Description

A trust is a fiduciary relationship in which one party holds legal title to another's property for the benefit of a party who holds equitable title to the property. An inter vivos trust is a trust that becomes effective during the lifetime of the person creating the trust (the settler or trustor).

A qualified terminable interest property trust, often referred to as a "QTIP" trust, allows a bequest to a spouse in trust that, after a proper election by the beneficiary spouse, qualifies for the unlimited marital deduction:

" if the beneficiary spouse is entitled to all of the income from the trust property,
" if the income is payable annually or at more frequent intervals, and
" if no person, including the beneficiary spouse, has the power to appoint any part of the qualifying property to any person other than the beneficiary spouse during the beneficiary spouse's lifetime.

In order that the property transferred to a surviving spouse by means of an inter vivos marital deduction trust qualify for the marital deduction, the property must be includible in the trustor's gross estate for federal estate tax purpose.

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FAQ

The answer lies in the use of a QTIP Trust. During the husband's lifetime, he can make unlimited marital gifts to his wife. If he makes them into a QTIP Trust, the assets are qualified for the marital deduction for gift and estate tax purposes.

Lifetime Marital Trusts, also known as Inter Vivos QTIP Trusts. An Inter Vivos QTIP Trust is a planning technique utilized in situations where one spouse does not own in his or her individual name sufficient assets to utilize all of his or her estate and GST tax exemptions.

Depending on the principal invasion standard and nature of assets in the trust, the surviving spouse may be able to act as her own trustee over the QTIP. There are a multitude of reasons why a QTIP trust may make sense for your estate plan.

One major benefit with a QTIP is the balance, (or principal) remains protected until the surviving spouse also passes away. At this point, other named beneficiaries, often your children or other family members, will then receive any remaining assets in the Trust.

In those cases, a simple 5 or 5 power, which allows the surviving spouse to distribute the greater of 5% or $5,000 of the marital trust to himself or herself, could be used, although any gift made under that power would incur a gift tax.

The QTIP trust terminates when the surviving spouse dies, and the assets are distributed to the final beneficiaries. The trust assets are counted as part of the gross estate of the surviving spouse and taxes must be paid if it is valued over the exemption limit.

If you create a QTIP trust, then at your death no estate tax is due on the assets that go into the trust. The assets qualify for the unlimited marital deduction, which lets all property, regardless of value, pass to a surviving spouse free of estate tax.

The QTIP election is a common way to qualify property passing in trust from a decedent to a surviving spouse for the estate tax marital deduction.

QTIP Trusts function almost the same as Marital Trusts. They're both irrevocable trusts that can only name the surviving spouse as beneficiary during that spouse's lifetime. However, the major distinction between the two is that with a QTIP Trust, the grantor of the trust maintains control of it, even after death.

More info

A trust is a legal arrangement pursuant to which a grantor (a.k.a. A qualified terminable interest property is an irrevocable trust that enables a grantor to provide for a surviving spouse, and other beneficiaries.§ 2-102 Share of Spouse (p. 29). Qualified terminal interest property (QTIP) trusts . Under Fla. Stat. 732. 401(2) elects to take one half of the residence in lieu of a right to live in the house for life. NonDonor Spouse Must File His or Her Own Return . Discretion Over Principal.

Clark Nevada Inter Vivos QTIP Trust with Principal to Donor's Children on Spouse's Death

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Can surviving spouse make gifts from QTIP trust?

What is an inter vivos QTIP trust?

Can surviving spouse be trustee of QTIP trust?

Who is the beneficiary of a QTIP?

Can you gift from a marital trust?

Is a QTIP trust included in the surviving spouse's estate?

Is QTIP property included in surviving spouse's estate?

Can surviving spouse make QTIP election?

Is a marital trust the same as a QTIP?

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