The purpose of a Q-tip trust is to provide for a living spouse. It enables you to control how the assets of that trust will be allocated following the death of that spouse. Income generated from the trust is handed out to the surviving throughout their life.
Q-tip trust is irrevocable and is particularly beneficial in case you have offspring from another marriage. To know more about your right consult a will and trust lawyer. This trust allows you to take care of your current spouse by simultaneously ensuring that the assets are distributed among other beneficiaries of your choice.
Your spouse will never be able to exert a power of appointment with a Q-tip trust. It is you who will be deciding how the funds will be managed. A Q-tip trust will prevent the transfer of assets if your ex-spouse chooses to remarry. The value of the trust is exempted from taxes after your death. The property emerges as taxable after the death of your spouse, and the burden of the liabilities falls upon the chosen beneficiaries.
At least one trustee has to be selected for managing the trust. However, more than one person or organization can be appointed as trustees at the same time. The concern of the trustees will be to manage the trust and determine how to manage the assets.
The income generated from the trusts, such as stock dividends, is received by the surviving spouse. The surviving spouse never gains actual ownership of the property. Thus, the surviving spouse can never be entitled to liens against the property in the trust or the whole trust.
The characteristics of a Q-tip trust match that of marital trust. A marital trust is created to control the assets of the spouse who deceases first. However, a Q-tip trust will allow you to manage the assets in the trust and choose the beneficiaries.
A Q-tip trust will allow your surviving spouse to reside in your house. But they will have the right to sell the property because the ownership belongs to the trust
Structure And Assets
A Q-tip trust is required to involve a property that generates some income and offers a stable source of income. Assets in a Q-tip trust are eligible for marital deduction because it is structured in accordance with the IRS. The marital deduction corroborates that the assets in a Q-tip trust are not taxable following your death.
After the death of your spouse, the assets are given to the chosen beneficiaries. The beneficiaries are required to pay tax if the value of the estate exceeds beyond the limit. Your surviving spouse can get long-term care with Q-tip care because it is not countable towards Medicaid resources.
Seek advice from a professional to check if a Q-tip trust is suitable for you.