Scranton Qualified Terminable Interest Property (QTIP) Trusts Lawyer
Qualified terminable interest property trusts are also known as QTIP trusts. This type of trust qualifies for a marital deduction and allows the grantor to provide for the surviving spouse while keeping control of how the assets are distributed once the surviving spouse passes away.
It’s difficult to predict how much money and assets someone will have at their death, and what amount will be subject to federal estate taxes can be very difficult to estimate. The variables like which spouse will live longer and will they remarry can make the process even more complex.
Establishing a plan that allows for some flexibility when it comes to distribution of your estate’s property, as well as one that takes advantage of the best tax benefits, is highly recommended. The QTIP trust is an enticing option that many couples opt to include as part of their estate plan. This is why you should meet with a skilled Scranton qualified terminable interest property trust lawyer who can go over the best options for your personal situation.
How Qualified Terminable Interest Property Trusts Work
A QTIP trust is a commonly used estate planning tool for couples who have children from a prior marriage. A QTIP will allow the grantor to take care of his or her current spouse while making sure trust assets are then passed along to any beneficiaries of their choice, which can also include children from a prior marriage.
A QTIP trust also keeps better control of assets in the event the surviving spouse passes away. Because the spouse never has power of appointment over the principal, this is how you prevent assets from transferring to the living spouse’s new partner should he or she remarry.
The surviving spouse named in the QTIP will receive payments from the trust, much like the issuance of stock dividends. Since he or she is not the true owner, no one can put a lien against the property listed in the trust or against the trust itself. The payments can continue until he or she passes away, and then they will cease because the payments are not transferable. That is when the assets are transferred to the named beneficiaries.
Property in the trust that provides funds to the surviving spouse will qualify for marital deductions, which means the trust’s value will not be taxed after the first spouse dies. It will become taxable after the surviving spouse passes away with the liability then transferring to the listed beneficiaries.
Naming a Trustee in a QTIP
You are required to name at least one trustee to manage the trust, although you have the right to name multiple people or even organizations. The trustees are responsible for control of the trust as well as to maintain authority on how the assets are managed. Trustees can include an attorney, friends, family members, organizations, or even the surviving spouse.
Retaining a Pennsylvania Estate Planning Lawyer
If you have questions on qualified terminable interest property trusts or other estate planning tools, let the team at Haggerty Hinton & Cosgrove LLP assist. Contact our office at 570-344-9845 today to schedule a consultation.