Blended Families

March 13, 2024

9126 / What is an irrevocable life insurance trust (ILIT) and how can an ILIT be useful in a blended family's estate plan?

<div class="Section1">An irrevocable life insurance trust (ILIT) is a trust funded by life insurance that cannot be modified, amended or revoked without the permission of the beneficiary. It is mechanism used in estate planning in which a grantor effectively removes all of his or her rights of ownership to the assets that have been transferred to the trust. The primary purpose of an ILIT is to reduce a decedent’s estate tax liability (while simultaneously providing for heirs) by removing a life insurance policy from the decedent’s gross estate.<div class="Section1"> An ILIT can be a valuable tool both for providing for children from a first marriage or a surviving spouse, and for reducing a decedent’s taxable estate. Prenuptial agreements ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9092">9092</a> to Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9093">9093</a>) can be helpful in providing that a surviving spouse’s inheritance will be limited to proceeds from the life insurance policy held by the ILIT. A prenuptial agreement can also provide that if the couple divorces, the beneficiary-spouse must forfeit all rights to the trust assets (which would presumably then pass to the insured’s children or other heirs). An ILIT allows a decedent to control who receives the proceeds of the life insurance policy because the proceeds are actually paid to the trust, and the governing trust documents then provide specific details as to who should receive the proceeds and under what circumstances. This strategy can also allow a decedent to protect an inheritance from the beneficiary’s creditors. For individuals who wish to benefit a generation of beneficiaries that is more than one removed (so that the generation skipping transfer (GST) tax would apply), a portion of the GST exemption amount ($13.99 million per individual in 2025; $13.61 million in 2024, $12.92 million in 2023; $12.06 million in 2022; $11.7 in 2021)<a href="#_ftn1" name="_ftnref1">1</a> can be applied to the transfers to the trust (thereby sheltering the entire amount of the proceeds from the GST tax). It should be noted that this can provide a valuable strategy for wealthy individuals who anticipate transferring wealth in excess of the exemption amount, as only the cash actually transferred to the trust to fund the life insurance policy premiums must be exempted. By allocating the GST tax exemption to those cash transfers, the larger value of the life insurance proceeds can be paid out entirely GST tax-free, while leaving a greater proportion of the exemption for allocation to other assets. </div><div class="refs"> <hr align="left" size="1" width="33%"> <a href="#_ftnref1" name="_ftn1">1</a>.  Rev. Proc. 2020-45, Rev. Proc. 2021-45, Rev. Proc. 2022-38, Rev. Proc. 2023-34. </div></div>

March 13, 2024

9127 / In the blended family context, what issues should be considered in planning for who will be responsible for payment of any transfer tax liability?

<div class="Section1">In the blended family context, an individual is likely to spend more time in his or her estate planning because of the inherent complications that can arise in these scenarios. Despite this, many may forget that any estate tax liability can reduce the carefully planned out inheritances that the decedent’s heirs will actually receive—generating potential conflict despite the most careful trust and gifting strategies.<div class="Section1"> In most cases, the decedent can specify in his or her will how estate taxes should be apportioned among the beneficiaries. In the absence of specific instructions from the decedent as to how the estate tax will be paid, both state and federal laws will need to be examined. For example, in New York and Florida, tax is generally apportioned among the estate beneficiaries in proportion to the value of the estate property that each beneficiary has received.<a href="#_ftn1" name="_ftnref1">1</a> Certain types of property (including marital deduction property) are specifically addressed at the federal level, and taxes relating to that property will be allocated to the person who received the property.<a href="#_ftn2" name="_ftnref2">2</a> In some cases, it can be beneficial for an individual to establish an irrevocable life insurance trust (see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9126">9126</a>) to provide liquidity to the estate in order to pay any anticipated estate taxes, rather than dividing liability for estate taxes between the heirs. </div><div class="refs"> <hr align="left" size="1" width="33%"> <a href="#_ftnref1" name="_ftn1">1</a>.  NY CLS EPTL § 2-1.8; Fla. Stat. § 733.817(2). <a href="#_ftnref2" name="_ftn2">2</a>.  IRC §§ 2207A, 2058. </div></div>

March 13, 2024

9118 / What considerations should be accounted for in choosing a trustee when a blended family is involved?

<div class="Section1">Many individuals who are engaged in estate planning for a blended family choose to establish trusts to ensure that their wishes in providing for various heirs are carried out. In these cases, it is important to carefully consider who will serve as trustee in carrying out those wishes.</div> <div class="Section1"> Many remarried individuals may be tempted to appoint their surviving spouse as trustee, but the relationship between the surviving spouse and any children from prior marriages should be considered before making this choice. Animosity between these parties can make trust administration difficult, and can lead to dissatisfaction among the children that the deceased spouse intended to benefit. The same issues can arise if another family member is named as trustee. These issues are magnified if the trust provides for discretionary distributions, as many trusts do. For this reason, a corporate or institutional trustee may provide the best option in order to minimize conflict in blended family situations in that an impartial third-party will be making decisions regarding trust distributions and general administration. </div>

March 13, 2024

9120 / What issues involving the use of spouses' estate tax exemption amounts can arise in a blended family? What is portability?

<div class="Section1">Although the issue of wealth disparity can present an issue in any marital context, more extreme differences in both age and wealth tend to become important in the blended family context (where individuals may be entering a second or third marriage, potentially later in life). In these cases, estate planning must take into account the potential use of a less wealthy spouse’s estate tax exemption, especially if the couple intends to keep their assets relatively separate.<div class="Section1"> For some couples, portability makes it easier to make full use of both spouses’ estate tax exemptions even in the face of wealth disparity. Portability, which is the right of a surviving spouse to use any of a deceased spouse’s unused transfer tax exemption amount, allows the surviving spouse to increase his or her own estate and gift tax exemption amount in order to exclude more of his or her assets from transfer tax liability (essentially excluding $27.98 million from estate tax liability per couple in 2025; $27.22 million in 2024).<a href="#_ftn1" name="_ftnref1">1</a> In a first marriage, portability can be useful because the assets of the first-to-die spouse will typically pass directly to the surviving spouse (sheltered by the marital deduction), so that the first-to-die spouse will use none of his or her exemption. Portability ensures that the surviving spouse (whose eventual estate may be larger because he or she has inherited the assets of the first-to-die spouse) can make use of both spouses’ exemption amounts. In the case of a subsequent marriage/blended family scenario, however, using portability may not be ideal because the spouses may wish to leave more property to children from previous marriages rather than leaving all assets to the surviving spouse. As a result, trust options may provide a more attractive strategy to allow spouses in a blended family to make full use of both spouses’ estate tax exemption amounts. See Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9121">9121</a> to Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9123">9123</a> for a discussion of some of the trust options that can be used by spouses in a blended family. <hr> Planning Point: Clients should be aware that only the estate tax exemption of the most recent spouse can be used via portability.<a href="#_ftn2" name="_ftnref2">2</a> Therefore, if a client’s spouse predeceases him or her and the client chooses to remarry, the exemption amount of the first spouse will be lost if the subsequent spouse dies before the client. However, the client can continue to use his or her first spouse’s exemption for lifetime gifts made before the death of the subsequent spouse. <hr> Portability is also discussed in Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9108">9108</a>. </div><div class="refs"> <hr align="left" size="1" width="33%"> <a href="#_ftnref1" name="_ftn1">1</a>.  Rev. Proc. 2023-34. Portability was introduced in the Tax Relief, Unemployment Reauthorization and Job Creation Act of 2010, and was made permanent by the American Taxpayer Relief Act of 2012. <a href="#_ftnref2" name="_ftn2">2</a>.  Treas. Reg. §§ 20.2010-3(a), 20.2010-1(d)(5). </div></div>

March 13, 2024

9122 / How can members of a blended family use trusts in estate planning to fully use the exemption of both spouses when relying on portability is undesirable?

<div class="Section1">As discussed in Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9120">9120</a>, many individuals in a second or subsequent marriage may not wish to rely on portability in order to make use of both spouses’ federal estate tax exemption amounts. If the first-to-die spouse were to leave all assets outright to the surviving spouse (in order to take advantage of portability), that surviving spouse would have total control over those assets, including the ability to disinherit children from a prior marriage or even leave the first-to-die spouse’s assets to a new spouse.<div class="Section1"> In this case, an inter vivos trust may be desirable, as it can allow the first-to-die spouse to control the ultimate disposition of his or her assets, and can also provide the spouse with income during life. One example of such a trust provides the less wealthy spouse with a testamentary general power of appointment over the trust assets in the amount necessary to use that spouse’s estate tax exemption if he or she is the first-to-die spouse. This type of trust can also continue to provide the grantor of the trust (the wealthier spouse) with income rights during life. These trusts can be revocable, so as to provide protection in the event of a divorce.<a href="#_ftn1" name="_ftnref1">1</a> One downside to these types of trusts is that the power of appointment allows the poorer spouse to provide an inheritance to whomever he or she chooses (this feature avoids gift tax issues that would otherwise arise to make the trust structure undesirable). <hr> Planning Point: Because these types of trusts are not specifically approved by IRS regulation, competent professional advice must be sought out in order to weigh the potential risks and benefits of the many available types of trust structures. <hr> A joint revocable trust is another type of revocable trust that can be used to ensure both spouses’ exemptions are used, but this type of trust requires both spouses to contribute the assets (in the case of wealth disparity, this would mean that the wealthy spouse makes gifts to the poorer spouse to fund the trust). With both of these types of trust, a risk also exists that the IRS will determine that one spouse actually made the gift after his or her spouse’s death, causing potential problems in claiming the marital deduction. While a lifetime power of appointment may avoid this problem, it causes another in that the poorer spouse then has the lifetime power to appoint to whomever he or she chooses, unless the spouses agree that the spouse either exercise the power immediately in writing (with testamentary effect, becoming effective on the wealthier spouse’s death) or release the power. Because of these complications, many individuals prefer to use the qualified terminable interest property (QTIP) trust structure, which is governed by specific IRS regulations, discussed in Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9123">9123</a> and Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9124">9124</a>. See Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9125">9125</a> for a discussion of “A-B trusts”. Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9126">9126</a> discusses some of the potential uses of an irrevocable life insurance trust (ILIT). </div><div class="refs"> <hr align="left" size="1" width="33%"> <a href="#_ftnref1" name="_ftn1">1</a>.  For examples of these types of trusts, see Let. Ruls. 200403094 and 200604028. </div></div>

March 13, 2024

9124 / What are some of the considerations that should be taken into account when deciding whether to use an inter vivos or a testamentary QTIP trust?

<div class="Section1">The difference between an inter vivos and testamentary qualified terminable interest property (QTIP) trust is that the inter vivos trust is created and funded during the grantor's life, while the testamentary trust only becomes effective at the grantor's death (i.e., his or her will provides for creation of the trust). <hr /> Planning Point: Note that with an inter vivos QTIP trust, the trust documents can provide that the funding spouse will actually become the trust beneficiary if the less wealthy spouse is the first-to-die spouse. This option, however, still requires that the grantor not be given the right to amend, alter, revoke or terminate the trust.<a href="#_ftn1" name="_ftnref1">1</a> This strategy also carries the risk that the trust could be treated as a self-settled trust reachable by the grantor's creditors. <hr /> An inter vivos trust can also provide asset protection to the couple while both spouses are still living. Further, an inter vivos QTIP trust is "defective" for income tax purposes for the lives of both spouses—this eliminates the need to file separate income tax returns for the trust. Property held in the inter vivos trust is valued separately from property held individually by the surviving spouse for his or her benefit. This generally means that if, for example, a portion of a piece of property is held in the QTIP trust and a portion remains outside of the trust, each portion of the property could potentially be eligible for any applicable valuation discounts that may be available.<a href="#_ftn2" name="_ftnref2">2</a> One primary disadvantage to the inter vivos QTIP trust is that it is not revocable upon divorce. Therefore, once created, the divorced spouse remains entitled to the benefit of the QTIP trust assets if he or she survives the trust creator. Despite this, the trust document can limit the trustee's power to invade the trust principal by providing that such a discretionary right is available only if the beneficiary was married to the trust creator at his or her death. Prior to 2018, after divorce, income from the trust was includable only in the income of the beneficiary spouse.<a href="#_ftn3" name="_ftnref3">3</a> Because the testamentary QTIP trust only becomes effective at death, the grantor is able to modify his or her will following a divorce so that a prior spouse does not receive the benefit of the QTIP trust. <hr /> Planning Point: The 2017 tax reform legislation repealed IRC Section 682. Generally, the legislation modified the treatment of alimony payments with respect to divorces that occur after December 31, 2018, so that alimony will no longer be included in the income of the payee and deductible by the payor. Prior to its repeal, Section 682(a) provided that if a divorced spouse received income from a grantor trust (which would otherwise be taxable to his or her former spouse), the income would be taxable to the spouse receiving the payments. New IRS guidance provides that this rule will continue to apply if the divorce occurred on or before December 31, 2018 (unless the relevant instrument is modified to provide that the post-reform rule will apply). For divorces that occur after December 31, 2018, the grantor will now be taxed on income paid to the former spouse through the grantor trust. Because of this, spouses who create grantor trusts prior to or during the marriage should consider this issue, and potentially provide that the grantor trust will terminate upon divorce (or that the payor spouse will otherwise be reimbursed for taxes through other assets of the donee spouse). <hr /> </div> <div class="refs"> <hr align="left" size="1" width="33%" /> <a href="#_ftnref1" name="_ftn1">1</a>. Treas. Reg. § 25.2523(f)-1(d). <a href="#_ftnref2" name="_ftn2">2</a>. See, e.g., Estate of Mellinger v. Comm., 112 TC 26 (1999). <a href="#_ftnref3" name="_ftn3">3</a>. IRC § 682(a). </div>

March 13, 2024

9117 / What gift and estate tax issues typically arise in the case of couples who have divorced and remarried?

<div class="Section1">It is common for couples who have been divorced and remarried to have children from prior marriages, complicating the transfer of wealth both during life and upon death. In some cases, an individual may have some idea of the specific assets he or she wishes to transfer to a particular child, or may wish to provide more generous gifts to heirs who are less able to provide for themselves. In other cases, the goal of the individual is to create some level of equality in each heir’s inheritance and minimize conflict in general. In any event, federal transfer taxes (estate, gift and generation skipping transfer taxes) must be taken into account in order to minimize tax liability.<div class="Section1"> If the individual plans to begin making gifts during life (perhaps in order to minimize the necessity for complicated estate planning or to ensure that specific tangible assets pass to a certain beneficiary), he or she should attempt to take advantage of the $19,000 in 2025 per donor/donee annual gift tax exclusion amount (if the spouse consents, up to $38,000 per donee can be sheltered each year).<a href="#_ftn1" name="_ftnref1">1</a> The exclusion amount applies only to present interest gifts (i.e., it does not apply to gifts where the donee only has the right to enjoy the property in the future (see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="905">905</a>)). Generally, if the gifts exceed the annual exclusion amount, the donor is responsible for paying gift tax on the fair market value of the property transferred and must file a gift tax return (Form 709) by April 15 in the year following the year in which the gift is made.<a href="#_ftn2" name="_ftnref2">2</a> Individuals who choose not to transfer wealth gradually during life should plan for the estate tax and the generation skipping transfer tax (GSTT; applicable if the individual wishes to “skip” a generation in making his or her bequests). With respect to the estate tax, individuals should note that most transfers between spouses fall within the unlimited marital deduction, so will not be subject to estate tax.<a href="#_ftn3" name="_ftnref3">3</a> Transfers to certain types of trusts (QTIP trusts, see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9123">9123</a> and Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9124">9124</a>) also qualify for the marital deduction.<a href="#_ftn4" name="_ftnref4">4</a> Estates that are valued at below the transfer tax exemption amount are also exempt from the estate tax. In the blended family context (where age and wealth disparity are often factors), it can be important to plan to make use of both spouses’ exemption amounts (either through portability or trust planning (see Q <a href="javascript:void(0)" class="accordion-cross-reference" id=""></a> to Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9122">9122</a>). If an individual wishes to transfer wealth to a “skip” generation (i.e., his or her grandchildren or great-grandchildren), GSTT planning becomes important. The transfer tax exemption amount discussed above also applies to the GSTT. In many cases, the individual may wish to transfer assets into a trust, allocating a portion of his or her GSTT exemption to the transfer. In this case, the assets in the trust can be allowed to grow sheltered from any GSTT and provide for grandchildren and great-grandchildren in the future while using up only a minimal amount of the transferor’s GSTT exemption. Of course, for direct transfers to skip generations made during life, the $19,000 (in 2025) per donor/donee gift tax annual exclusion amount is available. See Q <a href="javascript:void(0)" class="accordion-cross-reference" id="874">874</a> to Q <a href="javascript:void(0)" class="accordion-cross-reference" id="891">891</a> for an in-depth discussion of the GSTT. </div><div class="refs"> <hr align="left" size="1" width="33%"> <a href="#_ftnref1" name="_ftn1">1</a>.  Rev. Proc. 2018-57, Rev. Proc. 2022-38; IRC § 2513; Treas. Reg. § 25.2513-2. <a href="#_ftnref2" name="_ftn2">2</a>.  IRC § 6019. <a href="#_ftnref3" name="_ftn3">3</a>.  IRC § 2056. <a href="#_ftnref4" name="_ftn4">4</a>.  IRC § 2056(b)(7). </div></div>

March 13, 2024

9119 / What is a spouse's elective share? How can a spouse's election impact estate planning in a blended family?

<div class="Section1">Pursuant to state law, a surviving spouse is entitled to claim a portion of his or her deceased spouse’s estate in lieu of the inheritance that the decedent chose to leave for the survivor (whether via will, trust or otherwise). In the traditional family context, this is often not an issue because the first-to-die spouse simply leaves his or her entire estate to the survivor with the understanding that the surviving spouse has sufficient incentive to provide for the couple’s mutual children or other heirs.<div class="Section1"> In the blended family context, a deceased spouse may choose to leave certain of the assets to children from a prior marriage, with only a specified portion of the estate passing to the surviving spouse. This can create a problem when such a scenario intersects with state elective share rules, which may provide that the surviving spouse is entitled to a greater portion of the estate than the decedent directed. As a result, the elective share rules must be considered when engaging in estate planning for a blended family. In many cases, blended families will use a qualified terminable interest property (QTIP) trust (see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9123">9123</a> to Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9124">9124</a>) to ensure that the surviving spouse is satisfied with his or her inheritance while still providing for children from a prior marriage. </div></div>

March 13, 2024

9121 / What issues need to be weighed when a blended family is choosing whether to rely upon portability or trust options to ensure that both spouses' estate tax exemptions are fully used?

<div class="Section1">As discussed in Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9120">9120</a>, portability can allow a surviving spouse to take advantage of both his or her federal estate tax exemption and the exemption of the first-to-die spouse (the generation skipping transfer tax exemption is not portable). For some couples, portability is appealing because of its simplicity—the executor of the estate is only required to file an estate tax return and elect portability.<a href="#_ftn1" name="_ftnref1">1</a> Using portability to take advantage of both spouses’ estate tax exemptions also avoids the necessity of forming a trust, which can be expensive to establish.<div class="Section1"> However, if an individual does not wish to leave the bulk of his or her assets to the surviving spouse, a trust option can prove more effective for carrying out the individual’s wishes. Using trusts to provide for various family members’ inheritances can also help prevent family conflict after the first-to-die spouse’s death, as all heirs (including the surviving spouse, adult children and grandchildren) can be informed ahead of time to avoid unpleasant surprises that can lead to disagreement and even lawsuits. Using a trust instead of portability can also create adverse tax consequences, however. As a general rule, the basis of property that has been acquired from a decedent is the fair market value of the property at the date of the decedent’s death (i.e., the basis is “stepped up” or “stepped down,” as the case may be, to the fair market value for estate tax valuation purposes). When portability is elected, the assets in the estate receive two basis adjustments—one after the death of the first-to-die spouse and one after the death of the surviving spouse, assuming the assets remain in the surviving spouse’s estate. When the same assets are held in a trust, the assets do not receive a step-up in basis at the death of the surviving spouse (assuming they are excluded from the surviving spouse’s estate, which is the goal of many trust options in blended family situations). If the assets appreciate substantially in value between the deaths of the two spouses, receiving a second step-up in basis can result in tax savings.<a href="#_ftn2" name="_ftnref2">2</a> Further, if the family resides in a state that imposes its own estate or inheritance tax, federal portability rules will not apply to those state-level taxes. The rates, exemption levels and how these taxes are imposed can vary significantly from state to state (i.e., the rate can vary based upon who inherits the property). </div><div class="refs"> <hr align="left" size="1" width="33%"> <a href="#_ftnref1" name="_ftn1">1</a>.  IRC § 2010(c)(5); Treas. Reg. § 20.2010-2. <a href="#_ftnref2" name="_ftn2">2</a>.  IRC § 1014(a). </div></div>

March 13, 2024

9123 / What is a qualified terminable interest property (QTIP) trust and how can QTIP trusts be useful in planning for the blended family?

<div class="Section1">In many cases, an individual may wish to provide security for a surviving spouse during that spouse’s lifetime, but simultaneously wish to ensure that his or her children are the ultimate trust beneficiaries. In a blended family, this issue becomes even more pronounced because a surviving spouse may have his or her own children from a prior marriage, or may remarry and have additional children after a prior spouse has died. Unlike trusts that grant the poorer spouse a power of appointment over trust assets, a qualified terminable interest property (QTIP) trust provides the surviving spouse with only a lifetime interest in trust assets, helping to ensure that the first-to-die spouse’s wishes are carried out. Unlike the trusts discussed in Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9124">9124</a>, however, a QTIP trust is irrevocable <hr> Planning Point: If a substantial age disparity exists between the spouses, a QTIP trust may not be an attractive option, as it requires that the decedent’s children and other heirs wait until the death of a much younger spouse before receiving property that may form the bulk of their inheritance. <hr> A QTIP trust is a trust that contains qualified terminable interest property. “Qualified terminable interest property” means property (1) which passes from the decedent, (2) in which the surviving spouse has a “qualifying income interest for life,” and (3) as to which the executor makes an irrevocable election on the federal estate tax return to have the marital deduction apply. The surviving spouse has a “qualifying income interest for life” if (1) the surviving spouse is entitled to all the income from the property, payable annually or at more frequent intervals, and (2) no person has a power to appoint any part of the property to any person other than the surviving spouse unless the power is exercisable only at or after the death of the surviving spouse.<a href="#_ftn1" name="_ftnref1">1</a> The last requirement may be violated even if it is the surviving spouse who is given the lifetime power to appoint to someone other than the surviving spouse.<a href="#_ftn2" name="_ftnref2">2</a> A QTIP allows a decedent to provide for a surviving spouse, receive the marital deduction, and pass the remainder to beneficiaries the decedent selects in his or her will. <hr> Planning Point: A QTIP election is irrevocable, so that the property transferred to the QTIP trust will be included in the surviving spouse’s gross estate. <hr> An executor can elect under IRC Section 2056(b)(7) to treat an individual retirement account and a trust as QTIP if the trustee is the named beneficiary of decedent’s IRA and the surviving spouse can compel the trustee to withdraw from the IRA an amount equal to all the income earned on the IRA assets at least annually and to distribute that amount to the spouse. No person can have a power to appoint any part of the trust property to any person other than the spouse.<a href="#_ftn3" name="_ftnref3">3</a> Certain “terminable interests” in property do not qualify for the marital deduction. The purpose of this rule is to ensure inclusion in the surviving spouse’s estate of any property remaining in the estate at his or her death which escaped the initial tax in the predeceased spouse’s estate. A “terminable interest” in property is an interest which will terminate or fail on the lapse of time or on the occurrence or the failure to occur of some contingency. Life estates, terms for years, annuities, patents, and copyrights are therefore terminable interests.<a href="#_ftn4" name="_ftnref4">4</a> Some terminable interests are deductible and some are nondeductible under the marital deduction law. In general, a “terminable interest” is nondeductible if (1) another interest in the same property passes (for less than an adequate consideration) from the decedent to someone other than his or her spouse (or that spouse’s estate), and (2) the other person may possess or enjoy any part of the property after the spouse’s interest ends. See Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9124">9124</a> for a discussion of some of the considerations that should be taken into account in deciding whether to create an inter vivos or testamentary QTIP trust. <div class="refs"> <hr align="left" size="1" width="33%"> <a href="#_ftnref1" name="_ftn1">1</a>.  IRC § 2056(b)(7). <a href="#_ftnref2" name="_ftn2">2</a>.  TAM 200234017. <a href="#_ftnref3" name="_ftn3">3</a>.  Rev. Rul. 2000-2, 2000-1 CB 305. <a href="#_ftnref4" name="_ftn4">4</a>.  IRC § 2056(b); Treas. Reg. § 20.2056(b)-1(b). </div></div>