A QTIP marital trust created for the benefit of a surviving spouse provides that the spouse receives all income and trust principal for health and support. A QTIP election was made. Which statement about inclusion of the trust in the surviving spouse's gross estate is correct?

A QTIP marital trust created for the benefit of a surviving spouse provides that the spouse receives all income and trust principal for health and support. A QTIP election was made. Which statement about inclusion of the trust in the surviving spouse's gross estate is correct?

• A. The trust's assets will be included in W's gross estate at her death because W had a limited power of appointment over the trust.
• B. The trust's assets will be included in W's gross estate at her death because she was entitled to distributions from trust principal for her health and support.
• C. The trust's assets will not be included in W's gross estate at her death because a QTIP election was made.
• D. The trust's assets will be included in W's gross estate at her death because a QTIP election was made.

Answer: (D)

The concept being tested is how a QTIP election affects estate inclusion. A QTIP trust is designed to qualify for the unlimited marital deduction, allowing the surviving spouse to receive income (and possibly principal for health and support) while ensuring the trust property can be treated for tax purposes in a way that ultimately allows the related assets to be included in the decedent’s gross estate. Here, the election means the trust assets are treated as part of the surviving spouse’s estate at her death, so the assets are included in W’s gross estate when she dies. The other factors mentioned—a limited power of appointment or mere health-and-support distributions—do not by themselves dictate inclusion in the survivor’s estate, and the election itself does not negate inclusion.

The concept being tested is how a QTIP election affects estate inclusion. A QTIP trust is designed to qualify for the unlimited marital deduction, allowing the surviving spouse to receive income (and possibly principal for health and support) while ensuring the trust property can be treated for tax purposes in a way that ultimately allows the related assets to be included in the decedent’s gross estate. Here, the election means the trust assets are treated as part of the surviving spouse’s estate at her death, so the assets are included in W’s gross estate when she dies. The other factors mentioned—a limited power of appointment or mere health-and-support distributions—do not by themselves dictate inclusion in the survivor’s estate, and the election itself does not negate inclusion.