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.
The New Jersey Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death is a specific type of trust that provides a detailed legal structure for the distribution of assets in the event of a spouse's death. This trust is particularly relevant for individuals residing in New Jersey and looking to protect their estate and ensure a smooth transfer of wealth to their children. The key features of the New Jersey Inter Vivos TIP Trust include the establishment of a trust during the granter's (donor's) lifetime, the ability to retain control over the trust's assets, and the provision for transferring the principal to the donor's children upon the death of the surviving spouse. This ensures that both the donor's surviving spouse and their children are taken care of while maintaining control over how the assets are distributed. One notable advantage of this trust is the ability to minimize estate taxes. By utilizing the marital deduction, the trust enables the passing of assets to the surviving spouse tax-free, thereby potentially reducing the overall estate tax liability. Additionally, by specifically designating the principal to be distributed to the donor's children upon the surviving spouse's death, the trust ensures that the children receive their intended inheritance. There may be different variations of the New Jersey Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death. These variations could potentially include specific provisions for the management of assets, instructions related to income distribution during the surviving spouse's lifetime, and mechanisms for adding additional beneficiaries or contingent beneficiaries. It is important to consult with an experienced estate planning attorney in New Jersey to determine the specific type of Inter Vivos TIP Trust that best suits one's needs. With their expertise, individuals can create a comprehensive estate plan that protects their assets, provides for their spouse and children, and minimizes potential tax implications.
