Contingent transfers and the marital deduction - an area of continuing controversy

Article Abstract:

Contingent transfers to qualified terminable interest property (QTIP) trusts are still a troubling area for estate planners, despite the Tax Court's decision in Clack. Typically, such contingent transfers are held to be out of the scope of the marital deduction because they usually skew the QTIP provision that such trusts provide qualifying income interest for life to the surviving spouse. The Clack decision did not explicitly address this issue and should not be seen as a sign that the courts will begin allowing such contingent transfers to be part of the marital deduction.

Remainders (Estates)

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Qualified family-owned business interests - are they terminable interests?

Article Abstract:

IRC election section 2033A allows estates with qualified family-owned business interests to receive tax advantages which may not be as beneficial as tax advantages resulting from transferring those interests to surviving spouses. Qualified terminable interest property (QTIP) trusts may be depositories for family business interests contingent upon executors' QTIP elections. Planning and administration of such trusts is somewhat burdensome, but the IRS has not attacked their use.

Estate Planning, Small Business, Analysis, Usage, Decedents' estates, Family-owned business enterprises, Family-owned businesses

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An earful on QTIPs from the IRS

Article Abstract:

The IRS has expressed its distaste for the availability of the marital deduction for qualified terminable interest property (QTIP) by closely examining the drafting of QTIP trusts. The use of spendthrift clauses and trigger trusts has placed the availability of the marital deduction in jeopardy in some cases. In Estate of Clack, the Tax Court ruled that contingent bequests can be used to fund QTIP trusts and will qualify for marital deduction treatment.

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