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

Philadelphia Pennsylvania Inter Vivos QTIP Trust with Principal to Donor's Children on Spouse's Death

Name: Philadelphia Pennsylvania 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:

Philadelphia

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.

A qualified terminable interest property trust ("QTIP trust") allows a spouse to give a life estate in property to his or her spouse without incurring the federal gift tax. The donee (recipient) spouse has an income interest in the trust and does not have a power of appointment over the principal.

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.

You can also name your surviving spouse as a Trustee. However, keep in mind that will give them broad access to the assets in the Trust, which may defeat the purpose of setting up a QTIP at all.

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.

What's important to note is that after the first death, all the assets begin in a Bypass Trust; a QTIP election moves the assets out of the Bypass Trust and into the QTIP (or C Trust). If the QTIP election is not made, then all the decedent's assets will remain in the Bypass Trust.

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.

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.

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.

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Was to an inter vivos QTIP trust, and the trust assets were includible in the donee spouse's estate under Section 2044. Ants.

Philadelphia Pennsylvania Inter Vivos QTIP Trust with Principal to Donor's Children on Spouse's Death

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FAQ

Can surviving spouse make gifts from QTIP trust?

What is the purpose of a QTIP trust?

Is QTIP property included in surviving spouse's estate?

Can surviving spouse be trustee of QTIP?

Can surviving spouse make QTIP election?

What happens if you don't make a QTIP election?

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

Who is the beneficiary of a QTIP?

Can surviving spouse be trustee of QTIP trust?

What is QTIP property and how does it qualify for the marital deduction?

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What happens if the spouse remarries after the donor's death?

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