[WSBAPT] QDOT Planning in Washington

[Sam Furgason]

Speaking of QTIPs, here’s one: Surviving Spouse, beneficiary of QTIP and Credit Shelter Trusts, enters into agreement with remainder beneficiaries whereby SS receives all of QTIP plus a cash payment from CST in exchange for termination of both trusts and payment of remainder in CST to remainder beneficiaries. There are capital assets loss carryovers in QTIP attributable to prior securities sales from that trust in years past. Client is trustee of both trusts, and asks if losses can be allocated, in whole or in part, to remainder beneficiaries. My view is that since, pursuant to IRC Sec. 2056(b)(7) all QTIP income must pass to surviving spouse for life (she is still alive), losses must follow the assets, and are, in essence, a form of negative income which must be allocated entirely to SS. The theory additionally is that the losses can actually add to income by becoming tax deductions on distributed income and future gains on asset sales, as well as the logical idea that the losses must follow the assets distributed to SS. 

Anybody think the losses can be allocated to anyone other than the SS? 

 

Samuel L. Furgason

Samuel L. Furgason, Inc, PS

(Not accepting new business)

10655 N.E. 4th Street, Suite 701

Bellevue, Washington 98004

MAIL TO:

PO Box 102

Medina, WA 98039-0102

Work:    (425) 649-1122

Cell:       (425) 445-9909

Email: sam at furgasons.com

 

 

 

From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of John J. Sullivan
Sent: Friday, April 01, 2016 1:20 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] QDOT Planning in Washington

 

Assuming the $5 million is CP, he only has to convert $500K of his share to her SP. 

 

Yes. There is no gift tax. Make sure it's segregated and stays her SP. he can even put it in an intervivos QTIP if he wants to control ultimate disposition and protect from her creditors. 

 

John Sullivan

Sent from my iPhone


On Apr 1, 2016, at 12:37 PM, Jacob Menashe <jacob at hickmanmenashe.com <mailto:jacob at hickmanmenashe.com> > wrote:

The situation: Husband is a US citizen. Spouse is not. They are Washington residents and have $5,000,000. Can Husband, during life, give Spouse $1,000,000, and thus avoid a Washington QDOT since his half of the $4,000,000 left will just be $2,000,000. I’m scratching my head and thinking the answer is yes, but I doubt if it’s that easy. (And realize that may be the tenor of the responses I get!) All responses though are appreciated!

 

Thank you, 

 

Jacob Menashe

 

_____________________________

Jacob H. Menashe

Hickman Menashe, PS

4211 Alderwood Mall Blvd., Suite 202

Lynnwood, WA 98036

(425) 744-5658 phone

(425) 744-6078 fax

Satellite Office in Bellevue

www.hickmanmenashe.com

 

 

 

 

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