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Simple English definitions for legal terms

Qualified Terminable Interest Property (QTIP) Trust

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A quick definition of Qualified Terminable Interest Property (QTIP) Trust:

A Qualified Terminable Interest Property (QTIP) Trust is a way for married couples to transfer property to each other without incurring gift or estate taxes. Normally, giving property to a spouse doesn't trigger taxes, but if the property is only given for a limited time, it can be subject to taxes. A QTIP Trust allows one spouse to give property to the other spouse for their lifetime, and then to other beneficiaries after the surviving spouse passes away. The surviving spouse can receive income from the trust, but can't change who the beneficiaries are. The trust must follow certain rules to qualify for tax benefits, but if done correctly, it can help the surviving spouse keep more of the property without paying extra taxes.

A more thorough explanation:

A Qualified Terminable Interest Property (QTIP) Trust is a type of estate planning tool that allows a couple to maximize their applicable exclusion amounts while qualifying for the marital deduction. When property is transferred to a spouse, it usually does not trigger gift or estate taxes under the marital deduction. However, if the property interest is terminable, it may not qualify for the marital deduction and may be subject to gift and estate taxes. A QTIP Trust is an exception to this rule.

A QTIP Trust allows the surviving spouse to benefit from the trust and qualify for the marital deduction if certain guidelines are followed. The trust must only benefit the surviving spouse during their lifetime, and this must be specifically provided for in the trust documents and unchangeable by the spouse or trustee. After the benefiting spouse passes, the QTIP Trust assets pass to the beneficiaries as set by the granting spouse, not the benefiting spouse. For estate tax purposes, the QTIP Trust assets apply to the benefiting spouse’s applicable exclusion amount.

Here is an example of how a QTIP Trust works:

John and Jane are a married couple with a combined estate worth $10 million. They want to ensure that their assets are distributed according to their wishes and that their surviving spouse is taken care of after they pass away. They decide to create a QTIP Trust. John sets up the trust and transfers $5 million into it. The trust is set up to pay Jane income from the trust assets during her lifetime. After Jane passes away, the remaining trust assets will be distributed to their children according to John's wishes.

In this example, the QTIP Trust allows John and Jane to maximize their applicable exclusion amounts while still qualifying for the marital deduction. The trust ensures that Jane will be taken care of during her lifetime and that the remaining assets will be distributed according to their wishes.

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snow
20:31
I agree with dk ^
madollyy
20:31
Got it, thank you. I don't think there is much I can do for my GPA now since I only have 1 semester left for ug but I definitely will be studying my butt off for the LSAT.
Dkk
20:32
Nice!
madollyy
20:32
I really appreciate your advice, guys <3 Wishing you luck on your endeavors!
JumpySubsequentDolphin
20:32
@madollyy: is that your CAS GPA?
madollyy
20:33
That's what's on my transcript! I haven't done that one yet tbh. I get mostly A's, some B's. Got dragged down a bit too much from one D in my first semester though ><
JumpySubsequentDolphin
20:34
do you have any A+’s? that could help your gpa!
JumpySubsequentDolphin
20:36
bc LSAC recalculates A+ to 4.3
madollyy
20:39
Noo :( Unfortunately. I'm surprised that I don't, there were definitely some classes that I remember scoring 98-100% but it doesn't show on my transcript
madollyy
20:41
Acutally
madollyy
20:41
My university does not list A+
JumpySubsequentDolphin
20:42
yeah my university’s the same way, so frustrating! still a great GPA and with a killer LSAT score you’ll be good to go :)
JumpySubsequentDolphin
20:42
if you have the means, I’ve heard private tutoring is the way to go
madollyy
20:44
Fingers crossed! I mean I'd be so so glad to go to law school period, but I am a bit of an overachiever. Dream is Berkeley rn, but I'm of course happy to go anywhere that lines up with my plans. And is kind enough with scholarships lol
madollyy
20:44
I'll have to see if my parents are willing to support that. I'm living on my own but ik if it'd help me they'd be willing to help
JumpySubsequentDolphin
20:47
who knows, you might not even need a tutor! Take a diagnostic and see where you stand :)
Dkk
21:03
@madollyy: yeah that happend to me too with my community college transcript. You can try calling to see if they can alter your transcript but like mine would not do it.
Dkk
21:04
Ask @babycat to tutor you @madollyy
cat food is expensive tho
21:09
I HOPW THAT ISNT REAL
@JumpySubsequentDolphin: I would push back on this. I think for the vast majority of people LSAT tutoring is unnecessary.
21:09
oh its from nov 12 phew
21:09
i was about to have a heart attack
21:09
at the berk decision lmao
@madollyy: I focus on bringing your GPA up as much as possible in the last semester because once you graduate you cannot change that. So don't study for the LSAT next semester if you think that would impair your ability to get straight A's. As for LSAT studying, I would recommend LSAT Demon (ik controversial), the Loophole, and Reading Comp Hero.
*I would focus
JumpySubsequentDolphin
21:11
@texaslawhopefully: oh I’m not sure hahaha im just basing off of my friend who got a tutor bc she was rly struggling and it seemed like it helped her!
Yeah, that's fair! For some people it can help a lot. I'm just saying in general I don't think it is necessary unless you are trying to finetune a very specific area (or get to the high 170s because that is another thing in and of itself) OR are just terrible at the test. I tutor the test and I find that most people can improve just as much through self-study.
JumpySubsequentDolphin
21:13
that makes sense for sure
JumpySubsequentDolphin
21:13
i think for her it was a lack of discipline more than anything else tbh. she could not get herself to meaningfully study on her own
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