If you and your spouse want to protect your estate from being taxed when one or both of you dies, you can create a marital trust. It’s an estate planning tool that also allows you to provide for your spouse while he or she is still alive, and ensures that your children or other beneficiaries will also benefit from your estate. Below, our lawyer in Raleigh NC talks about marital trusts.
Types of Marital Trusts | Lawyer in Raleigh NC
Marital trusts are also known as “A” trusts. There are several types you can establish. Let’s take a look at a few of them to see how they may work so that you can decide if you want to include one in your estate plan.
General Power of Appointment (GPA)
This type of marital trust can be created to protect your surviving spouse while he or she is still alive. It provides income interest for life. The spouse also has power of appointment, meaning that he or she can make decisions about the estate. It is the least restrictive of marital trusts. There is a version of this type of trust that puts guidelines on what the surviving spouse can and cannot do. It is considered a limited power of appointment.
Qualified terminable interest property (QTIP)
QTIPs aren’t what you think they are. It’s a type of trust that allows the surviving spouse to be taken care of while he or she is alive, but it does not give them control over all of the assets. When the surviving spouse dies, what is outlined in the trust is carried out according to your estate plan. Usually, the assets are distributed to the heirs that you have designated. This type of trust can be used in cases where someone has remarried but has children from a previous marriage.
The common factor in any marital trust is that it allows you to defer any taxes paid on your estate through the marital deduction. The trust must meet the specific requirements of the IRS to qualify for it. You can consult with an lawyer in Raleigh NC to ensure that you have created a plan that meets federal guidelines and that will help protect you and your family.
If you're interested in learning more about marital trusts and the different types, be sure to visit back with our next blog post, soon.
Eldreth and Eldreth | Lawyer in Raleigh NC
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