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 South Dakota Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death is a type of trust specifically designed to provide financial security and asset protection for both the surviving spouse and the children of the donor in the event of the spouse's death. This trust structure offers unique benefits and is frequently utilized in estate planning strategies. With the Inter Vivos TIP Trust, the donor transfers assets into the trust while they are still alive, hence the term "inter vivos," which means "between the living." The trust is then structured in a way that allows the surviving spouse to receive income from the assets held in the trust during their lifetime. This is particularly beneficial when the donor wants to ensure that the surviving spouse is financially supported and has a secure lifestyle after their passing. The principal or assets held in the trust are typically distributed to the children upon the death of the surviving spouse. This feature offers added protection for the donor's children by guaranteeing that they will ultimately receive their share of the estate, regardless of any future circumstances that may arise. It allows the donor to maintain control over the ultimate distribution of assets, safeguarding their legacy. The South Dakota jurisdiction is particularly attractive for establishing this type of trust because of its favorable trust laws and regulations. South Dakota offers robust asset protection, perpetual trust duration, and no state income tax, making it a popular choice for individuals seeking to establish trusts. The state's trust-friendly environment provides beneficiaries with numerous advantages and safeguards their interests. It is important to note that there may be variations of the South Dakota Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death, tailored to specific circumstances or objectives. These variations may include provisions such as discretionary distributions, income tax planning strategies, or alternative distribution structures. In conclusion, a South Dakota Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death is a powerful estate planning tool that ensures financial security for both the surviving spouse and the donor's children. It allows for the transfer of assets while the donor is alive, provides income to the surviving spouse, and guarantees the ultimate distribution to the children. The South Dakota jurisdiction offers attractive trust laws that enhance the benefits and protections provided by this trust structure.
