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A qualified terminable interest property trust (Q-Tip Trust) is a marital trust for which a federal estate tax election can be made so as to qualify the trust property for the marital deduction. A Q-Tip trust must meet specific federal requirements to be considered valid.
→ Read MoreA QPRT, qualified personal residence trust, is a form of grantor retained income trust. The purpose of this type of trust is to place assets into an irrevocable trust and only grant the income from the trust to the trustor. The actual asset in the trust will eventually pass to a listed beneficiary such as a child or grandchild. The advantage to a QPRT is that it freezes the value of the asset in the trust allowing it to pass with fewer tax consequences for the beneficiary.
→ Read MoreA Totten trust is not actually a type of trust at all. In fact, it is a type of payable on death account that is payable to another after the demise of the account owner. The Totten trust earned its name from a landmark case in which the court found in favor of the named person on the account over the actual family of the deceased person. Not all states recognize the Totten trust, so it is always best to speak with an attorney before using this method for your estate planning.
→ Read MoreCrummey is the name of a taxpayer who succeeded getting an annual exclusion by establishing a trust containing withdrawal rights for the benefit of minor children. A Crummey trust is a special form of trust that contains a provision allowing one or more beneficiaries the right to withdraw the lesser of either the annual exclusion amount or the value of the gift property transferred into the trust. Crummey trusts specify the time each year when the funds can be withdrawn to ensure that the beneficiary does not incur gift taxes. Crummey trusts are most commonly created for minors and irrevocable life insurance trusts.
→ Read MoreA bypass trust is a trust designed to contain property that bypasses the surviving spouse’s estate thereby avoiding inclusion in that later estate. Bypass trusts are especially useful for spouses with large estates who are eventually planning to leave the remainder of their estate to children because it reduces the amount of estate taxes owed and aids in avoiding probate court.
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