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 Wisconsin Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death is a specific type of trust established in Wisconsin. This trust allows the donor to transfer assets to their spouse while still maintaining control over the distribution of those assets upon the spouse's death, ensuring that their children ultimately benefit from the trust's principal. The main purpose of this trust is to provide for the surviving spouse while also protecting the children's inheritance. By designating the children as the ultimate beneficiaries of the trust's principal, the donor ensures that their interests are safeguarded even after their own passing. The trust is established during the donor's lifetime and is considered irrevocable. This type of trust serves as an effective estate planning tool, as it allows the donor to utilize the marital deduction, which offers certain tax advantages. It allows them to transfer assets to their spouse upon death without incurring any estate taxes. However, the donor can still maintain control over the assets by specifying how they should be distributed upon the surviving spouse's death. There are various types of Wisconsin Inter Vivos TIP Trusts with Principal to Donor's Children on Spouse's Death, including: 1. Traditional TIP Trust: This type of trust directs the income generated by the trust assets to the surviving spouse during their lifetime. Upon the spouse's death, the trust's principal is then distributed to the donor's children. 2. Unit rust TIP Trust: Unlike the traditional TIP Trust, a unit rust TIP Trust does not limit the distribution to only the income generated by the trust. Instead, it allows for a fixed percentage or unit rust amount to be distributed annually to the surviving spouse. This provides flexibility in distributions, especially when the trust's assets may fluctuate in value. 3. Charitable TIP Trust: This type of trust incorporates charitable elements by designating a portion of the trust assets to be distributed to charitable organizations upon the surviving spouse's death. The remaining principal is then distributed to the donor's children. By utilizing a Wisconsin Inter Vivos TIP Trust with Principal to Donor's Children on Spouse's Death, individuals can ensure that their spouse is provided for during their lifetime while also guaranteeing the inheritance of their children. It offers tax advantages and the flexibility to tailor the trust's provisions based on the specific needs and goals of the donor and their family.
