Does qualified terminable interest property have any significance in conjunction with the Indiana inheritance tax?
A. Indiana imposes certain QTIP (Qualified Terminable Interest Property) election requirements which are different than the requirements applicable to the federal QTIP election. For readers who are unfamiliar with this concept, a “QTIP” transfer arrangement is one which qualifies for the federal estate tax marital deduction (or for the Indiana exemption applicable for transfers to spouses) in cases when the transfer may not otherwise have qualified for the federal estate tax marital deduction. In an Indiana case, the Indiana Department of Revenue disallowed the QTIP deduction because the formal election as required by the applicable regulation was not attached to the return when it was originally filed. The Indiana requirements are somewhat different and more onerous than the federal requirements, but the Indiana Tax Court nevertheless upheld the determination by the Indiana Department of Revenue. For those with an interest in and access to Indiana cases, the case cite is Department of
