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For example, Joe would like Mary to have access to his assets after his death, and for his estate to benefit from the marital deduction he would receive if he gave his assets outright to Mary. However, Joe does not want to take the chance that after his death Mary might give the property to beneficiaries that Joe does not like, perhaps her relatives or a new husband. A QTIP trust can be used to obtain the marital deduction, while retaining the right to control who will eventually receive the property when the surviving spouse dies.

If the QTIP trust requirements are met, property can be transferred into a trust for the benefit of the surviving spouse. Because of the unlimited marital deduction that will be allowed for this special kind of trust, the property will not be taxed in the estate of the spouse who dies first. The surviving spouse will have to include the QTIP property in his/her estate, the same result that would occur if the property would be given outright to the surviving spouse. However, the QTIP trust provisions (not the surviving spouse) will dictate the distribution of the QTIP assets at the death of the surviving spouse.

 

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.


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