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Trusts & Estates Glossary: Q
QUALIFIED DOMESTIC RELATIONS ORDER ("QDRO"):
An order, issued by court in a divorce, legal separation, or separate maintenance proceeding, which relates to child support, alimony or the division of marital property. In general, a qualified domestic relations order is required for the assignment of an employee’s benefits under either a qualified or non-qualified retirement plan in a divorce to be valid.
QUALIFIED DOMESTIC TRUST:
A trust created upon the death of an individual and qualifying for the federal estate tax marital deduction where the decedent’s surviving spouse is not a United States citizen. A qualified domestic trust is the only form of transfer that will qualify for the marital deduction for a decedent who leaves an alien spouse. In addition to satisfying the normal marital deduction rules, the trust instrument must require that at least one trustee be an individual who is a citizen of the United States or a domestic corporation, and that no trust distributions may be made without the consent of that trustee. An appropriate election on the estate tax return is also required.
QUALIFIED RESIDENCE INTEREST:
a Interest paid on indebtedness that is secured by a perfected security interest on the taxpayer’s principal residence or a second residence owned by a taxpayer and which is fully deductible for federal income tax purposes.
QUALIFIED SUBCHAPTER S TRUST:
A trust that is an eligible shareholder in a Subchapter S Corporation because there is only one income beneficiary, all income is distributed to that beneficiary currently and no principal is distributable during the income beneficiary’s life to anyone other than the income beneficiary.
QUALIFIED TERMINABLE INTEREST PROPERTY ("QTIP"):
A terminable interest that will qualify for the marital deduction if an appropriate election is made by the donor or executor. In order to be QTI property, the surviving spouse must be entitled to all of the income of the property during the spouse’s life and no person, including the spouse, may have the right to appoint the property to anyone other than the spouse during the spouse’s life. The major benefit of a QTIP marital trust to a grantor is that, at the surviving spouse’s death, the remaining trust property is not subject to a general power of appointment in the spouse, but instead passes to beneficiaries selected by the grantor.
With regard to a private foundation means any amount paid out to accomplish a legitimate eleemosynary purpose (as well as the administrative expenses which are incident thereto) or paid out to acquire an asset used directly in carrying out such purpose.
A form of conveyance of real property whereby the grantor conveys and the grantee receives only the title that was vested in the grantor, but without warranty of title by the grantor.