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 North Carolina Inter Vivos TIP (Qualified Terminable Interest Property) Trust with Principal to Donor's Children on Spouse's Death is a specific type of trust designed to provide for both the surviving spouse and the donor's children upon the death of the spouse. This trust is widely used in estate planning to ensure the protection and distribution of assets according to the wishes of the donor. The primary objective of an Inter Vivos TIP Trust is to provide for the surviving spouse during their lifetime, while also ensuring that the donor's children receive the remaining assets upon the spouse's death. This type of trust allows the donor to control the distribution of their assets, ensuring that they pass on to their desired beneficiaries. The Inter Vivos TIP Trust is considered "inter vivos" because it is created and funded during the donor's lifetime, rather than being established by a will or testamentary document. This allows the donor to maintain control and make amendments to the trust as needed. In North Carolina, there may be different types of Inter Vivos TIP Trusts with Principal to Donor's Children on Spouse's Death, depending on the specific circumstances and goals of the individual estate plan. Some variations may include: 1. Irrevocable Inter Vivos TIP Trust: This type of trust cannot be modified or revoked once it is established, providing a higher level of protection for the assets. Irrevocable trusts often offer tax advantages and may be utilized to mitigate estate taxes. 2. Revocable Inter Vivos TIP Trust: Unlike the irrevocable trust, a revocable trust allows the donor to modify, amend, or even revoke the trust during their lifetime. This flexibility can be beneficial for individuals who may need to adapt their estate plan to changing circumstances. 3. Testamentary Inter Vivos TIP Trust: Instead of being created during the donor's lifetime, this type of trust is established through the donor's will. It becomes effective upon the death of the donor and is often used in situations where the donor wants to provide for their spouse and children but does not want to surrender control of their assets during their lifetime. 4. Special Needs Inter Vivos TIP Trust: This type of trust is designed to provide for a spouse with special needs while ensuring that government benefits are not jeopardized. It allows the donor to allocate funds for the support and care of the special needs' spouse, while also preserving eligibility for government assistance programs. In summary, a North Carolina Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death is a valuable estate planning tool that allows for the continued financial support of a surviving spouse, while also ensuring the preservation and distribution of assets to the donor's children. Depending on the specific objectives and circumstances, there may be different variations of this trust available. Consulting with a qualified estate planning attorney can help tailor the trust to meet individual needs.
