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.
A District of Columbia (D.C.) Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death is a type of trust established during the lifetime of the granter to provide for the surviving spouse while ensuring that the principal assets ultimately pass to the donor's children upon the spouse's death. This trust combines the benefits of a Qualified Terminable Interest Property (TIP) trust and an inter vivos trust. In this type of trust, the granter transfers assets into the trust while they are still alive, rather than waiting for them to pass through a will or probate process after death. The trust is governed by the laws of the District of Columbia and offers specific advantages to individuals residing or owning property there. The primary purpose of a D.C. Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death is to provide for the surviving spouse's financial well-being after the granter's death while also preserving the principal assets for the ultimate benefit of the donor's children. This type of trust ensures that the spouse has income and support during their lifetime and that the principal assets are not distributed or dissipated in a manner that goes against the granter's wishes. Different variations or types of D.C. Inter Vivos TIP Trusts with Principal to Donor's Children on Spouse's Death may include: 1. Irrevocable Inter Vivos TIP Trust: Once the assets are transferred into this trust, the granter cannot revoke or regain control over them. This type of trust provides a higher level of protection and more stringent restrictions on the assets. 2. Revocable Inter Vivos TIP Trust: This trust allows the granter to make amendments or revoke the trust during their lifetime. It provides greater flexibility and control, but it may not offer the same level of asset protection. 3. Testamentary Inter Vivos TIP Trust: This is a trust established through the granter's will, meaning it does not take effect until the granter's death. Assets are transferred into the trust upon the granter's passing and are subject to probate. It still ensures that the surviving spouse receives income and support during their lifetime while preserving the principal assets for the donor's children. Overall, a D.C. Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death is a powerful estate planning tool for individuals in the District of Columbia who want to provide for their surviving spouse's financial needs while also safeguarding the principal assets for the ultimate benefit of their children. It is essential to consult with a trust and estate planning attorney to understand the specific laws and guidelines related to this type of trust in the District of Columbia.
