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Flexible Trusts: Protect Your Business and Help Your Spouse
When a business interest constitutes a substantial portion of an estate and the surviving spouse has little knowledge of or interest in the business, special problems can arise. Leaving your entire estate outright to your spouse in your will may provide for his or her needs, but it raises questions about preservation of the business for the benefit of your children. One solution is a qualified terminable interest property (QTIP) trust.
Gift Spotlight: Joe owns a successful business in which his daughter Meredith is an active participant. He wants Meredith to have the business someday but is concerned that his wife Sharon will need the income from the business after his death.
In his will Joe directs that the business interest be held in a QTIP trust with all income payable annually to Sharon for the rest of her life. At Sharon's death the business will pass outright to Meredith. The benefits include:
- The business will continue to be managed properly during Sharon's lifetime, and she will receive the income.
- The entire value of the business will qualify for the marital deduction in Joe's estate.
- The value of the business will be includible in Sharon's estate at her later death, when it passes to Meredith.
Get our complimentary guide for more ways to use a QTIP trust, including a gift to Swarthmore College that your spouse can use as needed before it comes to us. |
