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.
What are the practical considerations of funding a QTIP
marital deduction trust with an IRA?
Payment To Estate Trust or
Marital Deduction Trust: Payment of life insurance proceeds directly to a trust which otherwise qualifies for a marital deduction will qualify the proceeds for the marital deduction.
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).
Keller
Marital Deduction Trust, 29.7 percent; David and Jeanne Keller, 20.2 percent; Charles Henry Jr.
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. It is a testamentary trust--one created by the will of the spouse, that is, the first to die.
A trust can be structured to provide income to a surviving spouse without qualifying as a
marital deduction trust. The corpus therefore is included in the grantor's taxable estate and income can be distributed according to the grantor's wishes.
In the chart on page 29, the "A" trust represents a power of appointment trust, which is also referred to as a "
marital deduction trust." An expanded discussion of "general power of appointment" is contained on page 494.
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.
There are several planning tools available to help reduce taxes and other costs that typically fall to the "second-to-die." 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.
