Qualified terminable interest property does not qualify for the marital deduction unless the executor does which of the following?

Qualified terminable interest property does not qualify for the marital deduction unless the executor does which of the following?

• A. Gets unanimous, written consent of all present and future beneficiaries.
• B. Files a formal petition with the court.
• C. Elects to qualify it by listing the QTIP on the marital deduction schedule of the Estate Tax Return.
• D. Gets certain beneficiaries to disclaim.

Answer: (C)

The key idea here is that to have the surviving spouse get the benefit of a QTIP arrangement for the marital deduction, the executor must make a formal election on the estate tax return. Specifically, the executor must elect to qualify the property as QTIP by listing it on the marital deduction schedule of the Federal Estate Tax Return. This election is what converts the asset into QTIP and allows the marital deduction to apply, with the surviving spouse receiving income from the property for life and the tax not being fully realized until later. The other actions listed—getting beneficiaries’ consent, filing a court petition, or having beneficiaries disclaim—don’t create or trigger the QTIP election or the marital deduction.

The key idea here is that to have the surviving spouse get the benefit of a QTIP arrangement for the marital deduction, the executor must make a formal election on the estate tax return. Specifically, the executor must elect to qualify the property as QTIP by listing it on the marital deduction schedule of the Federal Estate Tax Return. This election is what converts the asset into QTIP and allows the marital deduction to apply, with the surviving spouse receiving income from the property for life and the tax not being fully realized until later. The other actions listed—getting beneficiaries’ consent, filing a court petition, or having beneficiaries disclaim—don’t create or trigger the QTIP election or the marital deduction.