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 York Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death is a type of trust specifically designed to provide for the surviving spouse while also ensuring the ultimate distribution of the trust assets to the children of the donor upon the spouse's passing. This type of trust is commonly used in estate planning to protect the interests of both the spouse and the children. The main purpose of a New York Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death is to maximize the use of the estate tax exemption by allowing the donor to transfer assets to the trust during their lifetime, thereby utilizing their lifetime exemption amount. By doing so, the assets that are transferred into the trust are removed from the donor's taxable estate, reducing potential estate tax liability upon their death. In this type of trust, the surviving spouse typically receives income generated by the trust during their lifetime and has the right to use the trust principal for their support and well-being. The surviving spouse is considered the income beneficiary of the trust. However, the ultimate distribution of the trust assets is predetermined to benefit the donor's children upon the spouse's death. The children are considered the remainder beneficiaries of the trust. There are different variations of the New York Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death based on specific estate planning goals and circumstances. Some variations may include provisions for the appointment of a trustee to manage the trust assets, define the scope of the surviving spouse's right to use trust principal, and outline the distribution of trust assets among the donor's children. It is important to consult with an experienced estate planning attorney to determine the most suitable type of New York Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death based on individual needs and objectives. Creating such a trust can help ensure the financial security of both the surviving spouse and the donor's children while minimizing estate tax liabilities.
