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QTIP Elections: How and When to Make QTIP, Partial, Clayton, and Reverse Elections

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Wednesday, October 19, 2022

Recorded event now available

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This course will review qualified terminable interest property (QTIP) elections, including the reverse, partial, Clayton, and the interplay of the QTIP election with the DSUE. Our trust and estate tax expert will explain how to utilize QTIP elections to maximize taxpayers' federal estate tax and GST exemptions and report each election on the appropriate returns.

Description

Assets qualifying for the marital deduction do not utilize the federal estate tax exemption at the death of the first spouse. Trusts holding QTIPs trusts can also take advantage of this unlimited marital deduction if timely appropriate election is made. Once made on the appropriate tax return, the election is also irrevocable.

Before portability, trusts were structured to use up the exemption of the first to die since otherwise, the first spouse's exemption would be wasted. Trust and estate professionals have new considerations now that spouses can port their estate tax exemptions.

In addition to federal estate and gift tax considerations, advisers must also consider the QTIP election on a donor or decedent's federal generation-skipping transfer tax ("GSTT") exemption. Although one can port the estate tax exemption to a decedent's surviving spouse, a decedent's unused GSTT exemption cannot be ported. A reverse QTIP election allows the first spouse to utilize the applicable portion of their GST exemption. Estate and gift tax professionals must thoroughly understand the available QTIP elections to preserve taxpayers' exemptions and save significant tax dollars.

Listen as I. Richard Ploss, Counsel at Porzio, Bromberg & Newman explains the various QTIP elections and how and when each should be made.

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Outline

  1. Qualified terminable interest property: introduction
  2. QTIP trusts as an effective estate planning technique
  3. How to qualify for QTIP treatment
  4. Elections
    1. QTIP election and the DSUE
    2. Partial
    3. Clayton QTIP Election
    4. Reverse QTIP Election
  5. QTIP trusts and the non-citizen spouse
  6. Other uses of QTIP trusts
  7. Reporting the QTIP trust
    1. Form 709
    2. Form 706

Benefits

The speaker will cover these and other critical issues:

  • When and how a spouse should make a QTIP election on Form 706, U.S. Estate and GST Tax Return
  • Coordinating the benefits of portability with a QTIP election
  • Making a reverse QTIP election to utilize a taxpayer's GSTT exemption
  • How to report qualified terminable interest property on Schedules M and RO of IRS Form 706
  • Which trusts qualify as QTIP trusts?

Faculty

Ploss, I. Richard
I. Richard Ploss
Counsel
Porzio, Bromberg & Newman

Mr. Ploss is a member of the firm's Trusts and Estates Department. He concentrates his practice primarily on...  |  Read More

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