The IRS recently issued Rev. Proc. 2001-38, which provides that an election for qualified terminable interest property (QTIP) will be treated as null and void for purposes of §§2044(a), 2056(b)(7), 2519(a), and 2652 when the election will have no estate tax consequences.

Normally, a QTIP election is made for property to remove it from the decedent's estate and include it in the estate of the surviving spouse. This can help maximize the unified credits of both spouses, especially if one spouse holds title to a majority of the couple's assets.

Now, if a QTIP election is made for a decedent's property, that election will be disregarded if the decedent's estate tax liability would be zero anyway. In other words:

The property for which the election is made will not be included in the estate of the surviving spouse;

The surviving spouse will not be treated as having made a gift if he or she disposes of the income interest in the property;

The surviving spouse will not be treated as the transferor of the property for generation-skipping transfer tax purposes.