Zach was the beneficiary of a QTIP trust established by his predeceased wife, Rita. Rita had three children from a prior marriage, and they were designated as the remainder beneficiaries of the QTIP trust. As of Zach’s death, the QTIP trust held assets valued at $14 million. Zach’s brother (who is designated as personal representative) seeks your assistance in the administration of Zach’s estate. Zach’s will devises his entire estate to Zach’s brother and sister in equal shares. Additionally, Zach’s will contains the following provision:
I direct that all estate, inheritance, or succession taxes, whether resulting from property passing under this Will or by non-probate transfer, be paid from the residue of my estate.
What are the estate tax consequences of the QTIP trust in Zach’s estate, if any? Also, explain the potential importance of the tax allocation provision in Zach’s will