To satisfy the QDOT rules and obtain the marital deduction, not only does the property have to be transferred to a QDOT and a timely election made on the estate tax return, but the
marital deduction trust requirements must also be satisfied.
6) One type of
marital deduction trust is also referred to as a "power of appointment" trust, in that the surviving spouse is given a general power of appointment over the trust during lifetime or at death.
The 2008 Cumulative Supplement to A Practical Guide to Drafting Martial Deduction Trusts updates the text of the main volume and includes the two complete updated
marital deduction trust forms.
What are the practical considerations of funding a QTIP
marital deduction trust with an IRA?
Where the couple plan to set up "generation-skipping trusts"(see Chapter 18) for the children, the exemption from generation-skipping transfer tax of the first spouse to die can be lost if the property passes outright to the surviving spouse, or in any form of
marital deduction trust other than a qualified terminable interest property trust (QTIP trust).
The will contained a savings clause that provided that if any provision of the will prevented the allowance of the marital deduction with respect to the
marital deduction trust, the provision was not to apply.
An example of good trust planning is a
marital deduction trust.
A trust can be structured to provide income to a surviving spouse without qualifying as a
marital deduction trust.
To address this problem, B could revise his will so that the stock and other assets going to A's benefit will be transferred from his estate to a qualifying
marital deduction trust following his death.
A
marital deduction trust establishes a separate living trust for each spouse and helps to use both spouses' applicable credits, each of which can shelter from federal estate tax up to a certain amount.
In addition, assume the will of the decedent provides for a credit shelter trust with the balance of the estate passing into a
marital deduction trust for the surviving spouse.
The trust instrument further said George and Lavedna's intention was the
marital deduction trust property "may qualify" for the qualified terminable interest property (QTIP) deduction and "shall only" be taxed in the estate of the second spouse to die.
