Disclaimed powers of appointment bar QTIP election
Article Abstract:
The Tax Court has affirmed the position taken by the IRS in rejecting a move by the trustees of a qualified terminable interest property (QTIP) to disclaim their powers of appointment as a way to enable a surviving spouse to claim a qualified income interest over a part of the trust not exclusively in her control. The case, 'Estate of Bennett,' revolved around the estate of a taxpayer who had set part of his estate to trust that was eligible for a marital deduction and the other part to a trust that could be used for the benefit of his wife and other beneficiaries. The Tax Court overturned the state court approval granted to the trustees to enable them to alter the terms of the trust and ruled that it was ineffective for purposes of federal estate tax determination. Furthermore, the court concurred with the IRS by stating that the trustees were barred from disclaiming their powers since their role was clearly stated in the terms of the trust.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1993
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IRA estate planning strategy uses QTIP trusts
Article Abstract:
The rules on qualified terminable interest property (QTIP) contained in Sec. 2056(b)(7) can be combined with an individual retirement account (IRA) to generate highly productive estate tax planning results. In doing so, tax practitioners should strive to keep the IRA in the best tax position by considering the distribution rules, including recalculation of life expectancies. Through the QTIP rules, taxpayer can enjoy estate tax savings by using the marital deduction to minimize estate taxes and control over who will ultimately receive the assets. In addition, tax professionals should always study the changing needs of their clients. They should re-evaluate the estate plan, including the manner by which the IRA should be used, on a yearly basis.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1996
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Post-death IRA distribution plan may include QTIP
Article Abstract:
A practitioner wishing to structure a tax-effective post-death individual retirement account (IRA) distribution plan must consider such factors as the needs of the client's beneficiaries and the tax consequences of a distribution plan's structure. The use of a qualified terminable interest property (QTIP) trust is recommended if the client wishes to provide a surviving spouse with a tax-advantaged distribution plan structure. Under Rev Rul 89-89, a QTIP trust can be designated as a beneficiary and then used to reinvest the IRA balance for the benefit of the surviving spouse.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1992
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