Effect Of Qtip Election. In its most basic form a QTIP trust is essentially an AB trust arrangement that is more restrictive than a typical marital trust. In effect the QTIP status of the trust allows for a deferral of federal estate tax if the Husbands estate has made a QTIP election on his federal estate tax return.
In effect the QTIP status of the trust allows for a deferral of federal estate tax if the Husbands estate has made a QTIP election on his federal estate tax return. The 6th Circuit Court of Appeals in the Spencer case rejected the Tax Courts power of appointment argument in effect saying that since the QTIP election is to be made at the time of filing of Form 706 which can be nine months or more under an extension of time to file after the date of death the time for determining if the property. However a QTIP election can have estate gift and generation-skipping transfer GST tax consequences for the surviving spouse.
The QTIP election does allow some flexibility in estate planning because the executor can decide to not select the QTIP election by not listing any property in the QTIP section of Form 706 to place all property specified by the trust document into the QTIP trust or to make a partial QTIP election by specifying that only a percentage of the trust property be included in the QTIP trust.
A reverse QTIP election permits the executor of the first spouse to die to elect that the QTIP trust will continue to be treated for purposes of the GST as property transferred by the first spouse to die even though the trust property is otherwise treated as belonging to the surviving spouse for estate and gift tax purposes. Up effects of the trust actually depend on whether or not a proper QTIP election is made for the trust at the first spouses death. Abstract- The US Court of Appeals for the Eighth Circuit has reversed the Tax Courts decision in Estate of Robertson v. Roberts estate tax returns made a QTIP election both federally and under New York Law.