A trust is a fiduciary relationship in which one party holds legal title to another's property for the benefit of a party who holds equitable title to the property. An inter vivos trust is a trust that becomes effective during the lifetime of the person creating the trust (the settler or trustor).
A qualified terminable interest property trust, often referred to as a "QTIP" trust, allows a bequest to a spouse in trust that, after a proper election by the beneficiary spouse, qualifies for the unlimited marital deduction:
" if the beneficiary spouse is entitled to all of the income from the trust property,
" if the income is payable annually or at more frequent intervals, and
" if no person, including the beneficiary spouse, has the power to appoint any part of the qualifying property to any person other than the beneficiary spouse during the beneficiary spouse's lifetime.
In order that the property transferred to a surviving spouse by means of an inter vivos marital deduction trust qualify for the marital deduction, the property must be includible in the trustor's gross estate for federal estate tax purpose.
California Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death is a specific type of trust that is established in California. This trust provides individuals with the ability to transfer assets and property to their children while ensuring that their spouse receives income from the trust for the remainder of their life. The trust is created during the lifetime of the donor (known as the inter vivos period) and utilizes the qualified terminable interest property (TIP) rules. In this trust, the donor designates their children as the ultimate beneficiaries of the trust's principal upon the death of their spouse. However, the surviving spouse is entitled to the income generated by the trust during their lifetime. This allows the surviving spouse to have financial security while ensuring that the children ultimately receive the trust assets. The California Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death provides various benefits, including estate tax reduction and flexibility in asset distribution. By utilizing this type of trust, individuals can take advantage of the marital deduction, reducing potential estate tax liability. Additionally, the trust offers flexibility in distributing the principal to the children as specified in the trust agreement. It's essential to note that there may be variations or different types of California Inter Vivos TIP Trusts with Principal to Donor's Children on Spouse's Death. These variations depend on the specific needs and goals of the individuals creating the trust. Some possible variants may include specific provisions for charitable distributions, customized income distributions to the surviving spouse, or limitations on the children's access to the principal until specific conditions are met. In summary, the California Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death is a legally recognized and widely used trust in California. It provides individuals with the ability to transfer assets to their children while ensuring their spouse's income security. With its flexibility and estate tax benefits, this trust allows individuals to create a comprehensive estate plan tailored to their unique needs and objectives.
