Washington Code 11.108.050 – Marital deduction gift in trust
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If a governing instrument contains a marital deduction gift in trust, then in addition to the other provisions of this chapter, each of the following applies to the trust to the extent necessary to qualify the gift for the marital deduction:
Terms Used In Washington Code 11.108.050
- Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Fiduciary: A trustee, executor, or administrator.
- Gift: A voluntary transfer or conveyance of property without consideration, or for less than full and adequate consideration based on fair market value.
- Internal revenue code: means the United States internal revenue code of 1986, as amended or renumbered as of January 1, 2001. See Washington Code 11.02.005
- Life estate: A property interest limited in duration to the life of the individual holding the interest (life tenant).
- Marital deduction: The deduction(s) that can be taken in the determination of gift and estate tax liabilities because of the existence of a marriage or marital relationship.
- person: may be construed to include the United States, this state, or any state or territory, or any public or private corporation or limited liability company, as well as an individual. See Washington Code 1.16.080
- Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.
- Trustee: A person or institution holding and administering property in trust.
- Trustee: means an original, added, or successor trustee and includes the state, or any agency thereof, when it is acting as the trustee of a trust to which chapter 11. See Washington Code 11.02.005
(1) If the transferor’s spouse is a citizen of the United States at the time of the transfer:
(a) The transferor’s spouse is entitled to all of the income from the trust, payable annually or at more frequent intervals, during the spouse’s life;
(b) During the life of the transferor’s spouse, a person may not appoint or distribute any part of the trust property to a person other than the transferor’s spouse;
(c) The transferor’s spouse may compel the trustee of the trust to make any unproductive property of the trust productive, or to convert the unproductive property into productive property, within a reasonable time; and
(d) The transferor’s spouse may, alone and in all events, dispose of all of the trust property, including accrued or undistributed income, remaining after the spouse’s death under a testamentary general power of appointment, as defined in section 2041 of the Internal Revenue Code. However, this subsection (1)(d) does not apply to: (i) A marital deduction gift in trust which is described in subsection (2) of this section; (ii) that portion of a marital deduction gift in trust that has qualified for the marital deduction as a result of an election under section 2056(b)(7) or 2523(f) of the Internal Revenue Code; and (iii) that portion of marital deduction gift in trust that would have qualified for the marital deduction but for the fiduciary‘s decision not to make the election under section 2056(b)(7) or 2523(f) of the Internal Revenue Code;
(2) If the transferor’s spouse is not a citizen of the United States at the time of the transfer, then to the extent necessary to qualify the gift for the marital deduction, subsection (1)(a), (b), and (c) of this section and each of the following applies to the trust:
(a) At least one trustee of the trust must be an individual citizen of the United States or a domestic corporation, and a distribution, other than a distribution of income, may not be made from the trust unless a trustee who is an individual citizen of the United States or a domestic corporation has the right to withhold from the distribution the tax imposed under section 2056A of the Internal Revenue Code on the distribution;
(b) The trust must meet such requirements as the secretary of the treasury of the United States by regulations prescribes to ensure collection of estate tax, under section 2056A(b) of the Internal Revenue Code; and
(c) Subsection (2)(a) and (b) of this section no longer apply to the trust if the transferor’s spouse becomes a citizen of the United States and: (i) The transferor’s spouse was a resident of the United States at all times after the transferor’s death and before becoming a citizen; (ii) tax has not been imposed on the trust under section 2056A(b)(1)(A) of the Internal Revenue Code before the transferor’s spouse becomes a citizen; or (iii) the transferor’s spouse makes an election under section 2056A(b)(12)(C) of the Internal Revenue Code regarding tax imposed on distributions from the trust before becoming a citizen; and
(3) Subsection (1) of this section does not apply to:
(a) A trust: (i) That provides for a life estate or term of years for the exclusive benefit of the transferor’s spouse, with the remainder payable to the such spouse’s estate; or (ii) created exclusively for the benefit of the estate of the transferor’s spouse; and
(b) An interest of the transferor’s spouse in a charitable remainder annuity trust or charitable remainder unitrust described in section 664 of the Internal Revenue Code, if the transferor’s spouse is the only noncharitable beneficiary.
NOTES:
Severability—Effective dates—1984 c 149: See notes following RCW 11.02.005.