What is the term for a terminable interest that qualifies for the marital deduction if the donor or executor elects?

What is the term for a terminable interest that qualifies for the marital deduction if the donor or executor elects?

• A. Qdot
• B. Qtip
• C. Bypass Trust
• D. Testamentary

Answer: (B)

In estate planning, a terminable interest that can qualify for the marital deduction when the deceased spouse elects is known as a Qualified Terminable Interest Property trust, or QTIP. In a QTIP setup, the surviving spouse receives all the trust’s income for life, and the remainder can go to other beneficiaries later. The donor or executor can elect to treat the property as QTIP for tax purposes, which makes the transfer qualify for the unlimited marital deduction. This lets the first spouse’s estate pass to the surviving spouse without immediate estate tax, with tax potentially due later when the survivor dies. Other terms aren’t about this specific election mechanism: QDOT is for a non-citizen surviving spouse, bypass trusts are designed to use the first spouse’s exemption while preserving assets for other heirs, and a testamentary arrangement is one created by a will.

In estate planning, a terminable interest that can qualify for the marital deduction when the deceased spouse elects is known as a Qualified Terminable Interest Property trust, or QTIP. In a QTIP setup, the surviving spouse receives all the trust’s income for life, and the remainder can go to other beneficiaries later. The donor or executor can elect to treat the property as QTIP for tax purposes, which makes the transfer qualify for the unlimited marital deduction. This lets the first spouse’s estate pass to the surviving spouse without immediate estate tax, with tax potentially due later when the survivor dies.

Other terms aren’t about this specific election mechanism: QDOT is for a non-citizen surviving spouse, bypass trusts are designed to use the first spouse’s exemption while preserving assets for other heirs, and a testamentary arrangement is one created by a will.