Like credit shelter or disclaimer trusts, QTIP
trusts can create tension, because the interests of multiple beneficiaries must be considered.
Provided there are sufficient assets to support the surviving spouse, it may be optimal for the trustee of the mari tal QTIP
trust to distribute the marital QTIP
assets to the surviving spouse.
8 TABLE 2 Contrast of the Availability of Wealth Transfer Strategies by Married and Unmarried Couples (4) WEALTH TRANSFER STRATEGY MARRIED UNMARRIED Lifetime Exemption $1 M Unified Tax Credit X X Unlimited Transfer (Marital Deduction) X Annual Exclusion of $11,000 per Recipient X X Gift Splitting X Intestacy Rules Favoring Partner/Spouse X Community Property X Living Trust X X Tax Free Gift of Income Interest to Spouse via QTIP
X Unlimited Charitable Deduction X X Charitable Donations Through a CRAT X X Favourable Social Security and Qualified Plan Distributions After Death of Spouse/Partner X
also includes guidance in how to apply process-monitoring tools to tool-qualification tasks.
Under the QTIP
rules, a life interest granted to a spouse will not be treated as a terminable interest and the entire value of the property in which the spouse is granted an interest will qualify for the marital deduction.
trust provides management of assets and access to income while limiting the ability of the beneficiary to consume large amounts of principal unless specifically provided for in the trust document.
The principal purpose of the proposed regulations is to extend the Commissioner's section 9100 authority to other than income taxes; the regulations were prompted by the occurrence of a substantial number of "blown" QTIP
elections for estate tax purposes.
When the B trust was greater than the applicable exclusion amount for that year, the excess over the exclusion amount was transfer red to either a QTIP
or martial trust--or it was used to enhance the A trust.
Alternatively, if they wish to take advantage of portability because they anticipate that upon the second of them to die they will not have an estate tax liability, and they want to take advantage of the step up in basis upon the death of the surviving spouse, perhaps they can make the by-pass trust a "QTIPable" trust, and possibly elect QTIP
(24) treatment for the by-pass trust, if it is desirable and possible upon the first spouse's death.
For a married individual who died in 2010, the decision whether to file an estate tax return and make a QTIP
election to obtain a marital deduction may depend on the anticipated amount of the estate tax exemption at the date of the surviving spouse's death.
Almost routinely, advisors encourage the use of a QTIP
Trust as the preferred technique for blended families with higher net worth.
255) The unlimited marital deduction clause in a QTIP
trust must provide all income (except stub income) to the spouse, at least annually, and disallow any other permissible beneficiary during the spouse's lifetime.