What is a Qualified Terminable Interest Property Trust (QTIP)?
A QTIP trust is established for asset control, not tax savings. It is often used in combination with an AB trust. Any excess assets above the personal exemption amount are placed in the trust. In most cases, the surviving spouse must receive all income from the trust, the income must be distributed annually and any invasion of the trust principal must be for the benefit of the surviving spouse. The QTIP trust is typically used to qualify for the marital deduction, provide income and principal for the surviving spouse and then benefit the children of any earlier marriages. The distribution of the remainder is governed by the will or revocable trust of the first spouse to die, so the children of his or her earlier marriage(s) will usually receive the QTIP trust principal. A QTIP trust can also serve as a gifting tool to benefit charities chosen by the first spouse to die. If the QTIP remainder is transferred to charity, the estate of the surviving spouse will receive a charitable deducti
