Lifetime QTIPs can achieve tax and asset protection goals

Article Abstract:

The use of lifetime qualified terminable interest property (QTIP) trusts can be an effective way to achieve estate equalization of spouses and obtain tax breaks not available when outright gifts are used. The QTIP is especially attractive when protection from creditors is sought. An election is required and the donor spouse cannot retain general power of appointment if the marital deductions are to be claimed and creditors are to be avoided. The donor should be prepared to part with the property in case of divorce or death when using a QTIP in this manner.

Taxation, Transfer (Law), Marital property

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New regulations approve use of contingent QTIPs

Article Abstract:

In 1997, the IRS began to permit postmortem estate tax to be paid by the first spouse's estate when the first spouse has made part of the estate a qualified terminable interest property (QTIP). Federal laws require a disclaimer provision added to the will that permits the surviving spouse to disclaim some part of the marital gift and pass the disclaimed interest to other people. Reallocating assets with QTIPs would be helpful when the decedent spouse did not name the surviving spouse as the estate's executor.

Estate Planning, Laws, regulations and rules, Disclaimer of gifts

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TC changes position as to certain contingent QTIP elections

Article Abstract:

The Tax Court in Estate of Clack ruled that the marital deduction is allowable for interests that are contingent on QTIP elections for descendants dying before Feb 3, 1994. The Tax Court had been overruled by three separate appellate courts in earlier cases where it ruled that the marital deduction was not allowable. Estate planners should use disclaimer provisions when structuring such trusts and transactions, however, as it is likely the issue will continue to be appealed by both taxpayers and the IRS.

Cases, Estate tax, Estate taxes, Remainders (Estates), Marital deduction

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