For simplicity purposes, assume this is the ultimate distribution scenario upon the second death: 2 children living and one deceased child leaving 3 surviving issue. In other words, no QTIP election is deemed to have been made for purposes of GSTT. If you have questions regarding estate planning, trust contests, or any other trust administration issues, please contact the Schomer Law Group either online or by calling us in Los Angeles at (310) 337-7696, and in Orange County at (562) 346-3209. Contact us at 702-433-4455 today to schedule your consultation. Above, the survivor has made $5,000,000 in GSTT transfers and the decedent spouse made $1,500,000. In these circumstances, use of a QTIP trust with a reverse QTIP election could be a fruitful solution. This would allow the holder to appoint the assets to anyone, including the holder or the holder’s estate, or to the creditors of the estate. A QTIP election is also able to be made even where no estate tax is due as a result of the decedent’s death, and can also be made as to only a portion of the assets in a bypass trust. I recommend the Schomer Law Group and I wish we knew about them years ago. A QTIP Trust is created as an irrevocable trust which means the property transferred to the trust is no longer considered your money. My husband and I had put off doing this and Scott really made the process easy! Now, combined, husband and wife have, in 2009, a  GSTT exemption of $7,000,000.00. Section 2044 property is property for which a previous section 2056(b)(7) election (QTIP election) has been made, or for which a similar gift tax election (section 2523) has been made. Give us a call if you want to know how to ensure you have the Reverse QTIP protection. What are the Advantages and Disadvantages of a Living Trust? Another common choice married couples can consider is the bypass trust, also known as an AB trust. Central Coast Economic Forecast: Economy in Focus Pt. Very competent & informative – friendly atmosphere – ready to answer the most mundane questions – relaxed. Upon the second spouse’s death, the property in the bypass trust is then transferred to the final beneficiaries tax-free. Our Promise to You During COVID-19/Coronavirus. To qualify for this election, the surviving spouse must be the only person who can receive payments before death. After attending a seminar with Scott Schomer we realized that the time had come to get a trust. IN most cases, the couple’s children receive the assets in the bypass trust. The only limitation is that the spouse receiving the inheritance is not allowed to receive any income from the trust property nor retain any power of appointment as to the principal. After several detailed meetings, Liran and Cesar produced a large ( 300 pages + ) highly detailed trust document that we have used to make sure our family estate is well managed and clearly understood.They were all very helpful in answering myriad questions and explaining all the various options…, We would strongly recommend the Schomer Law Group to anyone with an estate of even modest means, to assure proper planning…. Yes. We were given very good reasons for why we should get a trust. For more information, see the instructions for Schedule F, later. Effectively, then, the Decedent is able to port his or her GSTT exemption to the Survivor (to the extent the QTIP trust is funded). Everything distributed equally from each trust. Therefore, the Decedent’s GSTT exemption can be allocated to the QTIP trust even though the trust is includable in the Survivor’s estate for estate tax purposes. The family trust, or B trust and a QTIP trust are also created. To qualify for this election, the surviving spouse must be the only person who can receive payments before death. If that was not the case, the assets would still be subject to your creditors. Basically, the GSTT functions to capture the estate tax that is avoided at the skipped generation. If you are looking for assistance with estate planning, wills and trusts, we highly recommend Schomer Law Group. He and his team help you every step of the way so you always know what to expect and what you are preparing for. On the other hand, the surviving spouse will retain the right to use the proper and receive income from it during the spouse’s lifetime. He is very passionate in making sure his clients get all that they need and we really appreciated it. This solution may result in greater usage of the reverse QTIP election. The only limitation is that the value of the trust assets must stay below the federal estate tax exemption amount or estate taxes will be imposed. As with anything, the IRS is kind enough to offer an exemption. Married couples, in particular, question which types of trusts will best serve their needs. This is called a skip transfer resulting in the application of the generation skipping transfer tax ("GSTT") (taxed at the same rate as the estate tax). We had contemplated updating our will and starting a trust for a number of years. If you have heard of a QTIP trust and a bypass trust, you may be wondering which one is  best. At the Las Vegas, NV Law Firm of Jeffrey Burr, we represent clients throughout Southern Nevada, including Overton, Logandale, Mountain's Edge, Henderson, Aliante, Boulder City, North Las Vegas, Mesquite, Pahrump, Summerlin, Southern Highlands, Green Valley, Laughlin, Clark County, Nye County and Lincoln County. #estateplanning, #schomerlawgroup, #qtiptrust. In this way, married clients who may be subject to GSTT may avail themselves to the benefits of portability while also maximizing their GSTT exemption. In general if a […] An automatic QTIP election is created for specific types of joint and survivor annuities. Probate & Estate Planning Savings Calculator, Special Needs Planning Can Protect Benefits, Top 10 Estate and Legacy Planning Techniques, Frequently Asked Questions For Families Without An Estate Plan, How to Know if You Need Extra Help With Your Grieving, Things You Need To Do When a Loved One Passes Away With a Trust, Things You Need To Do When a Loved One Passes Away With a Will, Trust Administration & Probate Definitions. Amid the challenges presented by COVID-19, the Law Firm of Jeffrey Burr is still here to protect your family and your estate. However, in some cases, the generation skipping transfer tax (“GSTT”) problem remains unsolved, because the portability provisions of Internal Revenue Code (“IRC”) § 2010(c) do not port or transfer the GST exemption of the deceased spouse (“Decedent”) to the surviving spouse (“Survivor”).