What is a QTIP Trust?
Congress realized that today many people are into their second, third or more marriages and that frequently, one spouse will have substantially more assets than the other spouse. For the spouse with all of the assets to be able to take advantage of the Unlimited Marital Deduction and the surviving spouses exclusion of $1,000,000.00, the law was changed to have a QTIP Trust or a Qualified Terminal Interest Property Trust. A QTIP Trust permits the spouse with all of the assets to “leave” the property to the surviving spouse, except the surviving spouse cannot touch the principal of the trust. She/he must have the QTIP Trust’s income (interest, dividends, royalties, etc.) for her/his lifetime. But, the spouse with all the assets gets an Unlimited Marital Deduction that makes his estate pay ZERO Estate Tax upon his death and it can utilize the surviving spouse’s exclusion of $2,000,000.00 (in the year 2006) when she dies.
