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S.F. No. 881 - Modification of Default Apportionment of Estate Tax Burden
Author: Senator Ann H. Rest
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
Date: March 16, 2015


This bill modifies the default apportionment rules applicable to estates that hold Qualified Terminable Interest Property (QTIP).  The purpose of a QTIP election is generally to grant the use of assets from an estate to a surviving spouse for life and prevent the surviving spouse from deciding the allocation of QTIP trust assets.  Once the surviving spouse dies, the QTIP trust assets revert to named beneficiaries. 

Under current law, the estate tax burden is proportional relative to the value of the estate between amounts that are part of the QTIP trust and those that are not.  A decedent may also direct a method of apportionment in a will that would supersede a default apportionment rule.  This bill would not change the ability of a decedent to direct an apportionment method, but would change the default rule, but requires that the estate tax burden is borne by beneficiaries with an interest in the QTIP trust.

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