Revocable Trust for Married Individual
(Marital QTIP and Family Trusts) (IL)

Summary

This template Revocable Trust for Married Individual (Marital QTIP and Family Trusts) (IL) is for a married person who will have a taxable estate at death. This is a complex trust containing multiple trusts, primarily for the benefit of the surviving spouse during his or her lifetime. This template includes practical guidance, drafting notes, alternate clauses, and optional clauses. This Revocable Trust creates a marital trust and a family trust at the settlor's death. If the trusts are funded and administered properly, there will be no federal estate tax due at the settlor's death. The revocable trust includes an optional provision authorizing the executor of the settlor's estate to qualify the marital trust assets as qualified terminable interest property (QTIP) in order to take advantage of the marital deduction. There are several advantages to including a QTIP trust provision in an estate plan, such as (1) providing the executor with the flexibility to determine the extent of the QTIP election, (2) the possible opportunity to achieve a step up in basis, (3) the ability to control the distribution of the assets at the death of the surviving spouse, and (4) the avoidance of estate taxes. Generally, a trust that includes a QTIP trust is best suited for either taxable estates or those likely to file an estate tax return for portability because the executor must make an affirmative election to qualify any or all of the marital trust as a QTIP trust. "Revocable trust" is another name for "living trust" or "inter vivos trust" and is typically used as a will substitute to avoid probate. The revocable trust also includes elements of disability planning, as assets can be managed by the successor trustee without an adjudication of incapacity. However, because the settlor retains power over the trust assets, revocable trusts do not provide asset protection. In addition to the creation of the trust, the settlor will need to fund the trust in order to avoid probate. To assist your client with funding, once he or she gives you a completed questionnaire, you should provide a checklist to help him or her understand the additional action required to coordinate the estate plan beyond executing the documents. This includes, for example, recording new deeds for real property, updating beneficiary designations with investment, retirement, checking, and savings accounts, and more. To ensure that all of the decedent's assets are properly transferred to the intended beneficiaries, a revocable trust should be used together and coordinated with a pour over will. Generally, use of such a complex trust template is limited to situations in which the value of the couple's aggregate assets exceeds the federal estate tax exclusion amount to be adjusted annually for inflation from 2020 through 2025 ($13.61 million per person and $27.22 million per couple in 2024 and $13.99 million per person and $27.98 million per couple in 2025), and the couple wants to defer any estate tax until the death of the survivor. For a more basic revocable trust, see Revocable Trust for Individual with Spouse or Partner (Basic) (IL). For a full listing of key content on creating an estate plan for an individual with a spouse or partner residing in Illinois, see Estate Plan for Individual with Spouse or Partner Resource Kit (IL). For an in-depth discussion of trusts, see the practice notes Characteristics and Uses of Trusts (IL), Requirements and Restrictions on Trust Purposes and Administration (IL), and Revocation, Amendment, and Termination of Trusts (IL). For an in-depth discussion of the estate tax marital deduction, see Marital Deduction. For an in-depth discussion on the federal and Illinois estate tax, see Tax Considerations in Estate Planning (IL).