Considerations in satisfying the qualifying income interest requirement for the QTIP election

The Economic Recovery Tax Act of 1981 created a new world for estate tax planners by permitting a marital deduction for qualified terminable interest property ("QTIP"). Under the QTIP provision, transfers of certain terminable interests may be considered qualified terminable interests if the decedent's executor so elects and the spouse receives a "qualifying income interest for life". A qualifying income interest must meet several conditions. The purpose of this article is to discuss the issues surrounding the qualifying income interest requirement, including the conditions which must be satisfied and the potential pitfalls in satisfying these conditions and their possible solutions.