Qualified Terminable Interest Property Trust


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Related to Qualified Terminable Interest Property Trust: QTIP trust

Qualified Terminable Interest Property Trust (Q-TIP)

A trust that allows a surviving spouse to receive income generated from the trust, while the actual distribution of the trust's assets is made to other beneficiaries such as the grantor's children.

Qualified Terminable Interest Property Trust

A trust into which the trustor deposits funds and other assets to provide for a surviving spouse while also maintaining control of what happens to those assets after the surviving spouse dies. In a Q-TIP, the trustor names his/her surviving spouse as beneficiary and provides that income and/or principal from the trust shall pass to that spouse upon the trustor's death. However, when the surviving spouse also dies, what remains in the trust is distributed to heirs as if it had been a part of the trustor's estate. A Q-TIP is a common trust when a person has children from a previous marriage; that Q-TIP provides for the surviving spouse but later is transferred to children from one's first marriage to ensure that the estate takes care of them as well.
References in periodicals archive ?
Often, a qualified terminable interest property trust (QTIP) is designated as beneficiary under these or similar circumstances to preserve the estate tax marital deduction and accomplish the nontax estate planning goals.
Example 1: A qualified terminable interest property trust is meant to qualify for the marital deduction.
For instance, in a qualified terminable interest property trust, all income requires distribution, at least annually.
Two methods by which property can be transferred within a family to minimize estate taxes are use of a qualified personal residence trust or a qualified terminable interest property trust.
1361-1(j)(4) allows a qualified terminable interest property trust to function as a QSST, if it otherwise qualifies.
This will make inter vivos funding of an irrevocable qualified terminable interest property trust difficult.
In addition, it was concerned that allowing existing trusts to default or "opt" into these new definitions of income would adversely affect their tax status as qualified terminable interest property trusts qualifying for the estate tax deduction, charitable remainder unitrusts, qualified S corporation trusts, grandfathered generation-skipping trusts or intentionally defective grantor trusts.
The timeless theme of financial planning for wealth preservation runs through this month's feature articles, from the impact of a recent IRS ruling on qualified terminable interest property trusts (QTIP) to using family limited partnerships (FLP).
Two of the marital trusts were intended to be qualified terminable interest property trusts (QTIPs); however, the will directed assets to be reallocated to the family trust to the extent not covered by a valid QTIP election.

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