[WSBAPT] QTIP for "benefit of" spouse ?

[Heather deVrieze]

I think the "for the benefit of" language covers your concern.

A payment to the school, doctor, landlord or other, is easily construed as for the benefit of the spouse, even though not paid to spouse directly.

If you want to be able to make distributions to children or other beneficiaries that do not directly benefit the spouse, that is where you run afoul of the rules for the marital deduction.

Heather S. de Vrieze
Attorney-at-Law
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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Cyrus Field
Sent: Monday, March 30, 2015 1:51 PM
To: 'WSBA Probate & Trust Listserv'
Subject: [WSBAPT] QTIP for "benefit of" spouse ?

Listmates-I am drafting an EP where a testamentary QTIP trust will likely be funded with several million $$ so I want to make extra sure I get it right.

I noticed the proposed distribution language in the WA EP Deskbook for Marital Trusts is that the trustee shall "pay to or for the benefit of my spouse" all income at least annually. Typically with testamentary trusts I also include language giving the PR/trustee discretion to make a distribution not just to the beneficiary but also to their a custodian, fiduciary, or person/entity furnishing health, education, support or maintenance for the beneficiary.

My question is whether giving the trustee such discretion for the manner in making distributions is sufficient to meet the spouse's "right to income" requirement? I see RCW 11.108.050 is a "marital deduction" savings statute and says that to the extent necessary to save the deduction, assets can't be distributed "to a person other than the transferor's spouse". Further, the IRS regs seem to imply their isn't a problem if spouse would get substantially all beneficial enjoyment of the trust  property (e.g. income, which would be taxable to the spouse) but it certainly isn't clear.

I can draft manner of making the distribution so that it is limited to the extent it doesn't jeopardize the marital deduction but am wondering if that is necessary.
Thanks in advance for any thoughts/insight/guidance, Cy
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