Which statement about inter vivos QTIP elections is correct?

Which statement about inter vivos QTIP elections is correct?

• A. The grantor must elect for all assets.
• B. The grantor can elect for less than all assets.
• C. The grantor cannot retain any control after formation.
• D. A QTIP election may only be made at the death of a decedent.

Answer: (B)

The concept being tested is the flexibility of inter vivos QTIP elections. You don’t have to treat every asset in a trust as QTIP. A grantor can elect QTIP treatment for some assets and not for others, within the same planning framework. This allows the property intended for the surviving spouse to qualify for the marital deduction (through the QTIP structure) while other assets can pass outside that treatment to other beneficiaries. This is why the correct choice is that you can elect for less than all assets. It gives precise control: you can designate which assets are QTIP property to ensure the surviving spouse has the intended income interest, and you can keep other assets outside the QTIP regime for different tax or inheritance outcomes. The other statements are not accurate because QTIP treatment isn’t limited to all assets, it isn’t forbidden to retain some control in a way that would violate QTIP rules (the key is the surviving spouse’s income interest and the related powers, not blanket loss of control), and inter vivos elections are available as opposed to being limited to the death of a decedent.

The concept being tested is the flexibility of inter vivos QTIP elections. You don’t have to treat every asset in a trust as QTIP. A grantor can elect QTIP treatment for some assets and not for others, within the same planning framework. This allows the property intended for the surviving spouse to qualify for the marital deduction (through the QTIP structure) while other assets can pass outside that treatment to other beneficiaries.

This is why the correct choice is that you can elect for less than all assets. It gives precise control: you can designate which assets are QTIP property to ensure the surviving spouse has the intended income interest, and you can keep other assets outside the QTIP regime for different tax or inheritance outcomes.

The other statements are not accurate because QTIP treatment isn’t limited to all assets, it isn’t forbidden to retain some control in a way that would violate QTIP rules (the key is the surviving spouse’s income interest and the related powers, not blanket loss of control), and inter vivos elections are available as opposed to being limited to the death of a decedent.