Frequently Asked Questions
Who is eligible for the Reverse QTIP Election?
Available for trusts where a marital deduction was allowed under section 2056(b)(7) or 2523(f).
How does the Reverse QTIP Election work?
Allows a decedent's estate or a donor spouse to treat property in a QTIP trust as if the QTIP election had not been made for GST purposes, effectively allowing the original transferor to use their own GST exemption on property that would otherwise be treated as the surviving spouse's property.
What law authorizes the Reverse QTIP Election?
The Reverse QTIP Election is authorized under IRC §2652(a)(3) of the Internal Revenue Code (Title 26, United States Code).
Statutory Text — IRC §2652
Source: Internal Revenue Code, Title 26, United States Code
§ 2652. Other definitions(a) TransferorFor purposes of this chapter—(1) In generalExcept as provided in this subsection or section 2653(a), the term “transferor” means—(A) in the case of any property subject to the tax imposed by chapter 11, the decedent, and
(B) in the case of any property subject to the tax imposed by chapter 12, the donor.
An individual shall be treated as transferring any property with respect to which such individual is the transferor.
(2) Gift-splitting by married couplesIf, under section 2513, one-half of a gift is treated as made by an individual and one-half of such gift is treated as made by the spouse of such individual, such gift shall be so treated for purposes of this chapter.
(3) Special election for qualified terminable interest propertyIn the case of—(A) any trust with respect to which a deduction is allowed to the decedent under section 2056 by reason of subsection (b)(7) thereof, and
(B) any trust with respect to which a deduction to the donor spouse is allowed under section 2523 by reason of subsection (f) thereof,
the estate of the decedent or the donor spouse, as the case may be, may elect to treat all of the property in such trust for purposes of this chapter as if the election to be treated as qualified terminable interest property had not been made.
(b) Trust and trustee(1) TrustThe term “trust” includes any arrangement (other than an estate) which, although not a trust, has substantially the same effect as a trust.
(2) TrusteeIn the case of an arrangement which is not a trust but which is treated as a trust under this subsection, the term “trustee” shall mean the person in actual or constructive possession of the property subject to such arrangement.
(3) ExamplesArrangements to which this subsection applies include arrangements involving life estates and remainders, estates for years, and insurance and annuity contracts.
(c) Interest(1) In generalA person has an interest in property held in trust if (at the time the determination is made) such person—(A) has a right (other than a future right) to receive income or corpus from the trust,
(B) is a permissible current recipient of income or corpus from the trust and is not described in section 2055(a), or
(C) is described in section 2055(a) and the trust is—(i) a charitable remainder annuity trust,
(ii) a charitable remainder unitrust within the meaning of section 664, or
(iii) a pooled income fund within the meaning of section 642(c)(5).
(2) Certain interests disregardedFor purposes of paragraph (1), an interest which is used primarily to postpone or avoid any tax imposed by this chapter shall be disregarded.
(3) Certain support obligations disregardedThe fact that income or corpus of the trust may be used to satisfy an obligation of support arising under State law shall be disregarded in determining whether a person has an interest in the trust, if—(A) such use is discretionary, or
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