10) Very often, two QTIP trusts
are established to maximize the decedent's generation-skipping transfer (GST) tax exemption; generally speaking, a "reverse-QTIP" election is made under I.
Both Millers have wills calling for all of their assets to go into QTIP trusts
The surviving spouse's $3,500,000 exemption amount may then be used to protect the remaining $3,500,000 of property, and the entire $7,000,000 has escaped GST tax (assuming separate QTIP trusts
of $3,500,000 and $500,000 are created).
combined with disclaimers have been increasingly used after EGTRRA 2001.
are a staple of estate planning form books, and qualifying drafting language is readily available.
are a popular estate-planning tool for married couples with potentially taxable estates.
When one spouse dies, the credit shelter and QTIP trusts
become irrevocable, providing the surviving spouse with income and principal for support and maintenance--but preventing the surviving spouse from redirecting trust assets to his or her own children or other outsiders When the surviving spouse dies, assets remaining in trust revert to the children of the first deceased spouse.
In addition, the trustee would also be instructed to pay any taxes attributable to the QTIP trusts
first from the nonexempt QTIP, upon the death of the surviving grantor.
Many taxpayers may need to consider funding QTIP trusts
with retirement assets.
However, Revenue Ruling 89-89 seemed to indicate that there was a difference for IRAs and qualified retirement plans, muddying the water and seemingly creating a marital deduction requirement that applied only to IRAs and qualified plans payable to QTIP trusts
Like credit shelter or disclaimer trusts, QTIP trusts
can create tension, because the interests of multiple beneficiaries must be considered.
In order to maximize the utility of this technique, the A-B or A-B-QTIP trust
device can be designed to pass to the A trust or to the A and QTIP trusts
together exactly enough property to reduce the federal estate tax in the estate of the first spouse to die to the lowest desired amount--even to zero.