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...

Santa Clara California Inter Vivos QTIP Trust with Principal to Donor's Children on Spouse's Death

Name: Santa Clara California 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:

Santa Clara

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.

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.

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.

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.

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.

The main disadvantage of a QTIP trust is conflicts it can generate between the remainder beneficiaries and the surviving spouse. These conflicts can relate to tax strategy, investment decisions, and overall trust administration.

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.

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.

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.

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Keeping Assets in the Family. Competency of the principal in the execution of the.Nowadays, most trusts are intervivos but trusts can be in a will (testamentary trusts). Guidance on the basis of grantor trust assets at death under Section 1014. Upon the death of the surviving spouse. CHARLES D. ("SKIP") FOX IV is a partner in the Charlottesville office of. In a revocable trust, the grantor retains control over the trust assets and can change the Trust during their lifetime. 1. S.) spouse would not trigger gain. Estate granted extension of time to make QTIP election.

Santa Clara California 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?

Can surviving spouse be sole trustee of QTIP trust?

What is the purpose of a QTIP trust?

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

Who is the beneficiary of a QTIP?

Can surviving spouse make QTIP election?

Which is a disadvantage of a QTIP trust?

Is QTIP property included in surviving spouse's estate?

Is a marital trust the same as a QTIP?

Can you gift from a marital trust?

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