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 New Mexico 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 the surviving spouse while also preserving assets for the donor's children upon the spouse's death. This trust is established during the lifetime of the donor (also referred to as the granter) and allows for the transfer of property into the trust. Keywords: New Mexico, Inter Vivos, TIP Trust, Principal, Donor's Children, Spouse's Death In New Mexico, an Inter Vivos TIP Trust is a commonly used estate planning tool that enables individuals to retain control over their assets while also providing for their spouse and children. This type of trust offers several benefits, including minimizing estate taxes, protecting assets from creditors, and ensuring the orderly distribution of wealth upon the donor's death. The "Inter Vivos" aspect of this trust refers to the fact that it is established during the donor's lifetime, as opposed to being created upon their death through a will. By creating the trust, the donor is able to transfer assets into it, which are then managed by a trustee appointed by the donor. This trustee has a fiduciary duty to act in the best interests of the trust beneficiaries. The "TIP" feature of the trust stands for Qualified Terminable Interest Property. This means that the surviving spouse is entitled to receive income from the trust during their lifetime, while the principal (or underlying assets) are preserved for the ultimate beneficiaries, who are typically the donor's children. The surviving spouse cannot access or control the principal, ensuring that it remains intact for eventual distribution to the designated beneficiaries upon their death. The New Mexico Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death can be tailored to fit the specific needs and goals of the donor. It allows for the distribution of income to the surviving spouse and ensures that the trust principal is passed down to the donor's children upon the spouse's death. This provides both financial security for the surviving spouse and asset preservation for the children. Different types of New Mexico Inter Vivos TIP Trusts with Principal to Donor's Children on Spouse's Death may vary depending on specific provisions and conditions set by the donor. These variations may include factors such as specific assets to be included in the trust, the amount and frequency of income distributions to the surviving spouse, provisions for the care of the surviving spouse, and instructions for the ultimate distribution of the trust principal to the donor's children. In conclusion, a New Mexico Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death is an effective estate planning tool that allows individuals to provide for their spouse during their lifetime while preserving assets for their children upon the spouse's death. By utilizing this trust, individuals can maintain control over their wealth and ensure a smooth transfer of assets to their intended beneficiaries.
