Qualified Terminable Interest Property Trust

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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 ?
Under the current EPTL section 5-1.1 A, however, in combination with the Q-TIP election fas provided in IRC section 2056 (b)(7)], a surviving spouse is permitted to satisfy the right of election by taking income for life and the marital deduction is allowed as long as no other person has any rights in the Q-TIP trust during the surviving spouse's life.
In such a situation, an advisor should point out that using certain types of trusts, such as credit shelter trusts and Q-TIP trusts, could accomplish this goal.
Federal law requires that all of the income of the Q-Tip trust be distributed to the spouse.[9] Under a total return trust it is theoretically possible that the percentage distribution would be less than accounting income.
With careful drafting, it is possible to qualify a QSST as a Q-TIP trust for the primary benefit of the shareholder's surviving spouse.
2056(b)(7) Q-TIP trust. The IRS ruled that the IRA itself qualified as a Q-TIP trust since the income earned on the undistributed portion of the IRA, as well as the income earned on the portion of the IRA distributed to the Q-TIP trust, would be distributed annually to the decedent's spouse for life and no person other than the spouse would have a power of appointment.
Pursuant to the terms of the IRA, upon the decedent's death, the IRA will distribute a sufficient amount of principal to the Q-TIP trust, based on the life expectancy of the surviving spouse, in order to meet the requirements of Sec.