Glossary – Q

glossary

 

 

 

QA
Qualified Appraisal.

QC
Quarter of Coverage.

QDOT
Qualified Domestic Trust.

QDRO
Qualified Domestic Relations Orders.

QDT
Qualified Domestic Trust.

QFOBI
Qualified Family-Owned Business Interest deduction. IRC §2057.

QFP
Qualified Financial Planner.

OGE
Office of Government Ethics.

QHEE
Qualified Higher Education Expenses.

QHP
Qualified Health Plan.

QI
Qualifying Individual Program.

QLTS
Qualified Lawyers Transfer Scheme.

QMB
Qualified Medicare Beneficiary Program.

QME
Qualified Medical Evaluator (workers comp term).

QP
Qualified Plans.

QPRT
Qualified Personal Residence Trust. An irrevocable trust. A taxable gift.

QR7
Quarterly Report required by Department of Public Social Services.

QRP
Qualified Retirement Plan.

QSST
Qualified Subchapter S Trust.

QSub
Qualified Subchapter S election.

QSST
Qualified Subchapter S Trust.

QSTP
Qualified State Tuition Program.

QTIP
Qualified Terminable Interest Property. IRC §§2056(b)(7) or 2523(f).

QTIP Trust
A type of trust that enables the grantor to provide for a surviving spouse and also to maintain control of how the trust’s assets are distributed once the surviving spouse has also died. Income, and sometimes principal, generated from the trust is given to the surviving spouse to ensure that he or she is taken care of for the rest of his or her life. This type of trust is commonly used by individuals who have children from another marriage. QTIPs enable the grantor to look after his or her current spouse and ensure that the assets from the trust are then passed on to beneficiaries of his or her choice, such as the children from the grantor’s first marriage.

QTP
Qualified Tuition Program.

Qualified Domestic Trust
The purpose of a Qualified Domestic Trust (known as a QDT or QDOT) is to preserve the marital deduction when the surviving spouse is not a United States citizen and the trust assets are likely to be subject to the federal estate tax if the marital deduction is not available.
The Marital Deduction: This deduction allows transfers of unlimited amounts of assets between spouses at death, but only if they are United States citizens. The result is that the surviving spouse does not have to pay any tax on the estate of the first spouse to die, provided the surviving spouse is a citizen of the United States. The marital deduction only postpones the federal estate tax on the estate, and, in some cases, may cost a married couple additional taxes if there are no other provisions to reduce estate taxes.
The Problem for Non-Citizens: If a married couple has an estate that is greater than the $5 million estate tax exemption, and one or both of them are not citizens, they need a QDT to avoid estate taxes on the death of the first spouse. For estates that are less than those amounts, no QDT is needed because no federal estate tax will be due.
However, for estates greater than those amounts, no marital deduction will be allowed if the surviving spouse is not a U.S. citizen and does not become a citizen by the time that the estate tax return is filed. Depending on the type of estate plan that the couple has, lack of a marital deduction could result in substantial estate taxes on the first death. This can be avoided if the assets are transferred to a Qualified Domestic Trust (QDT).
Requirements for a QDT: To qualify as a QDT, a trust must meet the following requirements:

At least one trustee must be a U.S. bank.

No distribution can be made from the trust, except for income, unless
the trustee who is the U.S. citizen or corporation has the right to
withhold estate taxes from the distribution.

The trust must meet Treasury regulations regarding the collection of any tax.

The executor must elect on the estate tax return to treat the trust as a QDT.
After the death of the surviving spouse, the assets in the QDT are subject to the estate tax as though they were included in the estate of the first spouse to die. These assets are not included in the surviving spouse’s estate.
Income distributed from the QDT to the surviving spouse is subject to income tax, but not estate tax. However, when principal is distributed from the QDT to the surviving spouse it is subject to estate tax, unless the distribution is made for hardship reasons.

Qualified Income Trust
Also known as a Miller Trust, an income gap trust.

Qualified Personal Residence Trust
The same as a PRT except that in a QPRT the residence may be sold without losing the tax benefits of the trust.

Qualified Terminable Interest Trust (QTIP)
See QTIP Trust.

Qualify
The term applied to the steps a proposed conservator must complete after he or she is appointed in order to receive Letters of Conservatorship. A conservator of the estate qualifies by obtaining and filing a bond. Conservators of the person and of the estate also must take an oath, sign a receipt for this handbook, and satisfy any local court requirements before they qualify.

Quasi-Community Property
Property acquired by married couple or domestic partners during marriage or partnership while residing in a state without community property that would be community property if it had been acquired in California. California treats quasi-community property as community property. Real property located outside California is not quasi-community property.

QVap Trust
It is often the case that a Veteran who owns a home wishes to receive the Veterans Aid & Attendance Benefit (also known as the Non-Service Connected Disability Pension). Many times this Veteran is in an Assisted Living Facility (ALF). There is nothing wrong with this and the home is a non-counted asset for this VA program. However, in many of these cases, the Veteran and his family need the money from the home to help pay for the Veteran’s living expenses at the ALF. That usually means that the home needs to be sold. If the Veteran is receiving the pension at the time the home is sold and the proceeds received, that typically will cause disqualification from the program. This problem can be avoided by transferring the house to the children before applying for the pension, the children sell the house, and the children use the proceeds to assist the Veteran.
This procedure will work but, unfortunately, the exclusion from capital gain for income tax purposes (up to either $500,000 or $250,000 depending on whether the Veteran is married or not) will not be available and tax will have to be paid. This additional tax could cost the family as much as $100,000 assuming a 15% Federal and 5% state income tax. This places the family in a dilemma: wait to apply for the aid & attendance benefit while the home is being marketed (maybe 8 months or more) or apply for the benefit now and pay extra income tax.
Irrevocable Trusts were already being used extensively in this field. This type of Trust typically places the assets beyond the control of the Veteran and does not interfere with qualification for the pension. There were many reasons that these types of Trusts were being used in lieu of simply transferring all of the Veteran’s assets to his children. For example, cases in which the Veteran has more than one child but the desire is for only one to manage the assets, one of the children is a spendthrift or cannot handle money, the Veteran desires to protect the assets being transferred from being taken by his child’s “ex” in a divorce or by a creditor of his child in a lawsuit. Sometimes the Veteran just likes the idea of the assets being in a Trust rather than in the children’s pockets, at least until the Veteran dies. Although Irrevocable Trusts do not interfere with qualification for the VA pension, typically they do not avoid the increased income tax problem when the home is sold.
By adding several special clauses, the Trust avoids the increased income tax by allowing the Veteran to claim the exclusion from capital gain. It, also, does not interfere with pension eligibility.