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What Is a QTIP Trust?

Posted by Chris Peterson | Jul 27, 2014 | 0 Comments

What Is a QTIP Trust?

What Is a QTIP TrustAmong the most prevalent concerns for married couples who are engaged in estate planning are how to delay payment of estate taxes, and how to make sure that the proper heirs receive the assets in the trust. Numerous trusts exist that allow both for the postponement of estate taxes until the death of both spouses and determination of which heirs inherit the assets. A QTIP trust, as a trust lawyer in Conroe will tell you, is a tool with limited use, but which may be a boon for spouses who have children from another marriage.

The QTIP Trust

If you and your spouse have never been married before and have no children from before the marriage, a marital deduction trust should suffice. This enables you to remove assets from the estate by placing them in trust, the purpose of which is to allow your spouse, as beneficiary, to use the assets to live on. The portion of the trust that is not used by the surviving spouse then passes to the beneficiaries upon her death, which in most cases would be the children. Only then will federal estate taxes, if any, be due.

A qualified terminable interest property trust operates in much the same way.

Advantages and Disadvantages of a QTIP Trust

As your trust lawyer in Conroe will tell you, most any type of trust carries with it certain disadvantages. To be sure, a QTIP gives control of the assets to the first spouse to die, ostensibly at least. However, such an arrangement is almost sure to give rise to conflict between the children from your first marriage and your surviving spouse. Such conflict is usually caused by:

• The fact that the surviving spouse can use assets from the trust to live on. The ultimate beneficiaries may argue that the assets are being drained inappropriately. • Disagreement between the parties as to how to invest the assets. • Distrust of any accounting of the assets by the surviving spouse.

Ultimately, it is best to discuss a QTIP option with your surviving spouse before setting it up to help alleviate such conflicts later.

If You Would Like to Create a QTIP

If you would like to set up a QTIP trust or have any estate planning questions, call a trust lawyer in Conroe at Peterson Law Group: 979-703-7014 or 936-337-4681.

About the Author

Chris Peterson

Chris Peterson is the owner of Peterson Law Group. He practices primarily in the areas of wills, trusts and estate planning; probate and trust administration; elder law; and business law. Chris is also the owner of Brazos 1031 Exchange Company.


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