The trustee will then make a QTIP election only for the assets selected for the QTIP trust
to receive the full step-up in basis at the second death.
The balance of the estate not passing to the family trust would be placed in a QTIP trust
, which would qualify for a marital deduction but be included in the survivor's gross estate.
Trust beneficiaries and the QTIP trust
loaned the estate funds to pay the estate tax, and the estate attempted to deduct interest paid on the loan, which the IRS challenged.
Have terms that qualify it as a power of appointment trust, a qualified terminable interest property trust (QTIP trust
), a qualified charitable remainder trust (qualified CRT), or an estate trust; (10)
That's especially true for people who are in a second (or even a third) marriage, because a QTIP trust
can prevent a second spouse from disinheriting children from a first marriage.
The surviving spouse could disclaim her income interest in the QTIP trust
created by the first-to-die spouse.
In this private letter ruling, the IRS allowed an extension of time for the executor of an estate to correct the decedent's failure to properly plan for generation skipping transfer ("GST") taxes when he created a QTIP trust
to pass assets to his beneficiaries.
I find this leads to much less of the A-B trust needs we are used to seeing, although there is often still the need for a QTIP trust
-- Qualified Terminable Interest Property -- and a discussion of the pros and cons.
Warshaw (1), is to make gifts from a marital QTIP trust
Almost routinely, advisors encourage the use of a QTIP Trust
as the preferred technique for blended families with higher net worth.
A QTIP trust
allows the surviving spouse to receive income from the trust's assets for life but the principal goes to someone else, usually the children.
Thus, in Revenue Ruling 89-89, (8) a decedent's executor was permitted to elect to treat a decedent's IRA as eligible for the QTIP marital deduction where (1) the distribution option elected by the decedent for the IRA required the principal balance of the IRA be distributed in annual installments to a testamentary QTIP trust
and the income earned on the undistributed balance of the IRA be distributed annually to the trust, and (2) all trust income was payable annually to decedent's spouse.