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 Virginia Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death is a type of trust arrangement that provides for the transfer of assets from a donor to their children upon the death of their spouse, while maintaining control over the principal during their lifetime. This trust is commonly used in estate planning to ensure the financial security of both the surviving spouse and the donor's children. In this type of trust, the donor creates a trust during their lifetime (known as an "inter vivos" trust) and designates their spouse as the primary beneficiary during their lifetime. Upon the death of the spouse, the principal of the trust is transferred to the donor's children. The income generated by the trust assets may be distributed to the surviving spouse during their lifetime, providing them with financial support. By utilizing a Virginia Inter Vivos TIP Trust, the donor can ensure that their children receive the principal of the trust upon the death of their spouse, regardless of any subsequent remarriages by the surviving spouse or changes in their financial circumstances. This type of trust provides for the long-term financial security of the donor's children, allowing them to inherit assets while still maintaining the financial well-being of the surviving spouse. There may be variations of the Virginia Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death, depending on specific circumstances and estate planning goals. Some of these variations may include: 1. Testamentary TIP Trust: This type of trust is created within the donor's Last Will and Testament and takes effect upon their death. It allows for the transfer of the trust principal to the donor's children on the death of their spouse. 2. Revocable TIP Trust: In this variation, the donor retains the ability to modify or revoke the trust during their lifetime. It offers flexibility in case financial circumstances or family dynamics change. 3. Irrevocable TIP Trust: Unlike the revocable trust, an irrevocable TIP trust cannot be modified or revoked by the donor once it is established. This type of trust provides more certainty and protection over the assets, ensuring the desired distribution to the children upon the spouse's death. 4. Special Needs TIP Trust: This type of trust is suitable when one or more beneficiaries have special needs and rely on public assistance programs. It safeguards the assets while preserving eligibility for government benefits. In conclusion, a Virginia Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death is a powerful estate planning tool that allows a donor to provide for their surviving spouse while ensuring their children receive the trust's principal upon the spouse's death. The specific type of trust utilized may vary depending on individual circumstances and goals.
