What is the terminable interest rule?
nondeductible terminable interest rule n : a rule in estate tax law: the value of a property interest that passes to a surviving spouse may not be deducted if it passes from the surviving spouse to another person for less than adequate consideration upon the happening of some event (as the passing of a period of time)
What is a terminable interest and what are the exceptions to the terminable rule?
The well-known exceptions to the “terminable interest” rule include both qualified terminable interest property (“QTIP”) trusts and general power of appointment marital trusts, both of which qualify for the gift tax marital deduction.
What is terminal interest?
A conditional interest in property that terminates or fails after a period of time or on the occurrence, or failure to occur, of an event or contingency. Examples include interests that lapse on the remarriage or death of the recipient.
What does QTIP stand for?
qualified terminable interest property
Key Takeaways. A qualified terminable interest property (QTIP) trust allows an individual, called the grantor, to leave assets for a surviving spouse and also determine how the trust’s assets are split up after the surviving spouse dies.
What is terminable interest in estate planning?
A qualified terminable interest property trust (“QTIP trust”) allows a spouse to give a life estate in property to his or her spouse without incurring the federal gift tax. The donee (recipient) spouse has an income interest in the trust and does not have a power of appointment over the principal.
What is a QPRT used for?
A qualified personal residence trust (QPRT) is a specific type of irrevocable trust that allows its creator to remove a personal home from their estate for the purpose of reducing the amount of gift tax that is incurred when transferring assets to a beneficiary.
Is QTIP property included in gross estate?
The QTIP would be included in the surviving spouse’s gross estate and is normally held in a trust called a marital or QTIP trust (Sec.
What is AQ trust?
A QTIP trust (officially a qualified terminable interest property trust) is a type of trust that allows someone to provide income for their surviving spouse and bequeath property and assets to a different set of beneficiaries.