QTIP stands for Qualified Terminable Interest Property. It’s a type of trust used at the first spouse’s death to provide for the surviving spouse while still letting the grantor control who eventually receives the assets. The defining feature is that the surviving spouse must receive all income from the trust, at least annually, for life, but the right to that income ends at death (or under other terms set in the trust). This setup allows the trust to qualify for the marital deduction, meaning the assets can pass to the spouse without federal estate tax at the first death, while still keeping the principal to be directed to other beneficiaries after the surviving spouse dies. The trust assets remain part of the deceased spouse’s estate for tax purposes, even though they go to the spouse tax-free for the life of the survivor. The term “Qualified” refers to meeting IRS requirements to qualify for the marital deduction. The other phrasings aren’t standard terms in trust vocabulary and don’t describe this arrangement.

GST tax is charged at the top rate in effect for the estate/gift tax system. In practice, a generation-skipping transfer is taxed using the maximum rate that applies to the transfer year, applied to the taxable amount after any exemptions or credits. This means the rate doesn’t vary with the size of the transfer or differ by the transfer’s nature; it’s the flat, maximum rate used for the calculation. That’s why the correct description is that the tax is applied at the highest estate tax rate in effect at the time.

Acronyms in estate planning come from the exact four words of the official name. The Spousal Lifetime Access Trust is abbreviated SLAT because it takes Spousal, Lifetime, Access, and Trust. This is the standard designation used in practice, reflecting the four-part name of the trust type. That’s why SLAT is the recognized acronym. Other phrasings don’t match the common term professionals use, so they aren’t the standard abbreviation.

In GSTT, the rate you apply to the taxable amount is not just the maximum estate tax rate; it’s scaled by how much of the transfer is treated as a direct skip. That scaling factor is the inclusion ratio, which reflects the portion of the transfer that remains subject to GST tax after applying the exemptions. So the applicable rate is the maximum estate tax rate multiplied by the inclusion ratio. For example, with a 40% maximum rate and an inclusion ratio of 0.6, the applicable rate becomes 24%. This captures the idea that exemptions reduce the effective tax rate applied to the skip portion. The other formulations either ignore the exclusion effect or misapply the exemption, so they don’t correctly describe the rate used for GSTT.