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QTIP Trust

When Mr. Jolson died in January 2003, his will provided for the establishment of a QTIP trust. Mrs Jolsen was named to receive income from the trust for her lifetime with their children named as remainder beneficiaries. Because Mrs. Jolsen has substantial other assets and income sources, she does not believe that the QTIP trust is necessary and prefers that the assets of the trust pass directly to their children instead. Is it possible for her to disclaim or renounce her interest in the trust? Would this renunciation or disclaimer result in the assets passing to the children from Mr. Jolsen's estate? What would the impact of the disclaimer on the martial deduction allowable to his estate?

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When Mr. Jolson died in January 2003, his will provided for the establishment of a QTIP trust. Mrs Jolsen was named to receive income from the trust for her lifetime with their children named as remainder beneficiaries. Because Mrs. Jolsen has substantial other assets and income sources, she does not believe that the QTIP trust is necessary and prefers that the assets of the trust pass directly to their children instead. Is it possible for her to disclaim or renounce her interest in the trust? Would this renunciation or disclaimer result in the assets passing to the children from Mr. Jolsen's estate? What would the impact of the disclaimer on the martial deduction allowable to his estate?
First let us be clear what is a QTIP trust. This is a type of trust for wealthy married couples that allows a surviving spouse to postpone estate taxes. A QTIP trust allows the surviving spouse to make use of the trust property tax-free. Kindly think in the following terms: Taxes are deferred until the surviving spouse dies and the trust property is received by the final trust beneficiaries, who were named by the first spouse to die.

Now let us examine why this trust came into being. To take advantage of the marital deduction, pre-1981 versions of the IRC required that the donee/beneficiary of a marital gift/bequest had to actualIy, receives ownership of the property and an ...

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QTIP Trust is debated.

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