Solutions to the Sexist QTIP Provisions

Real Property Probate and Trust Journal, Vol. 35, p. 97, 2000

33 Pages Posted: 11 Oct 2008

See all articles by Wendy C. Gerzog

Wendy C. Gerzog

University of Baltimore - School of Law

Date Written: October 8, 2008

Abstract

In this article, I elaborate on three solutions to the illogical and sexist QTIP provisions. Solution #1 is to require the surviving spouse be the one who can make the QTIP election; Solution #2 is to repeal the QTIP provisions, but modify the terminable interest rule. Solution #3 is to repeal the QTIP provisions, but retain the unlimited marital deduction.

The first of these solutions involves the smallest change in the current rules: the surviving spouse, and not the donor or executor, should be the one empowered to make the QTIP election. That one change in the QTIP provisions would make the marital deduction more reflective of a joint decision about "their" property, would eliminate some of the conflict of interest issues inherent in promoting the use of a QTIP, particularly where the executor is decedent's child from an earlier marriage, and is a more politically acceptable solution to repealing the QTIP, an extremely popular estate planning device.

The second solution is to repeal the QTIP, but modify the current terminable interest rule. This solution gives the decedent a marital deduction in the amount equal to what she actually receives as her income interest. Code sections 2702 and 2056(b)(5) provide a framework to draft a statute that would ensure that the widow would receive the sum certain stated on her husband's estate tax return. While paternalistic in its acceptance of a deduction for transfers of a life estate, this solution would at least require that the value of the marital deduction reflect the value of the lifetime benefit that the widow actually will receive so that she can make a more informed decision about choosing to elect or forgo her statutory share.

The third solution is the optimal one. The QTIP should be repealed; pre-1982 marital deduction rules should be restored, except for the unlimited marital deduction, which should be retained to the extent the decedent (or donor) actually leaves property to his widow (wife). While passage of the unlimited marital deduction was initially inextricably tied to the passage of the QTIP, the link may not be required in today's climate of family values. It is unlikely that, even if the QTIP provisions were repealed, Congress would want to repeal the unlimited marital deduction.

Keywords: QTIP, qualified terminable interest property, marital deduction, sexist

JEL Classification: H20, H29, K34

Suggested Citation

Gerzog, Wendy C., Solutions to the Sexist QTIP Provisions (October 8, 2008). Real Property Probate and Trust Journal, Vol. 35, p. 97, 2000. Available at SSRN: https://ssrn.com/abstract=1281022

Wendy C. Gerzog (Contact Author)

University of Baltimore - School of Law ( email )

1420 N. Charles Street
Baltimore, MD 21218
United States
410-837-4522 (Phone)

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