A trust is a legal agreement that creates a three party relationship by which fiduciary control of property, often a sum of money, is given by an individual, called the “trustor” or “settlor”, to a person or institution (the “trustee”) for the benefit of some number of beneficiaries. Property of any sort may be held in a trust. Trust benefits are usually created by a will, insurance policy, retirement plan, annuity, through the drafting of a trust instrument, or by other contract. Trusts are often favored in estate planning because they do not go through the probate system, and are governed by the terms under which the trust was created. Further, trusts are also favored, for both personal and commercial reasons, because of how trusts provide benefits with various tax laws and help in the protection of assets. A qualified terminable interest property (QTIP) enables the grantor to provide for a surviving spouse and maintain control of how the trust’s assets are distributed once the surviving spouse dies. Income, and sometimes principal, generated from the trust is given to the surviving spouse to ensure that the spouse is taken care of for the rest of their life. How Qualified Terminable Interest Property Trusts WorkThis type of irrevocable trust is commonly used by individuals who have children from another marriage. QTIPs enable the grantor to look after his current spouse and make sure that the assets from the trust are then passed on to beneficiaries of his choice, such as the children from the grantor’s first marriage. Aside from providing the living spouse with a source of funds, a QTIP can also help limit applicable death and gift taxes. Additionally, it can assert control over how the funds are handled should the surviving spouse die, as the spouse never assumes the power of appointment over the principal. This can prevent these assets from transferring to the living spouse’s new spouse, should she remarry. The property within the QTIP providing funds to a surviving spouse qualifies for marital deductions, meaning the value of the trust is not taxable after the first spouse’s death. Instead, the property becomes taxable after the second spouse’s death, with liability transferring to the named beneficiaries of the assets within the trust. QTIPs Trusts and Second Marriages • A QTIP trust allows the executor of the first spouse to die to make these decisions after the death of the first spouse. Q-Tip Trust LawyerWhen you need legal help with a Q-TIP Trust in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.
Ascent Law LLC
8833 S. Redwood Road, Suite C West Jordan, Utah 84088 United States Telephone: (801) 676-5506
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