Qualified Terminable Interest Property (QTIP) Trust

A qualified terminable interest property, or QTIP, trust lets a person control where their assets ultimately go if their spouse outlives them. When the first spouse dies, the trust supports the surviving spouse; when the surviving spouse dies, the remaining assets go solely to the first spouse’s chosen beneficiaries.

QTIPs are estate planning tools that couples can use for two primary purposes: to protect certain beneficiaries financially if a surviving spouse remarries or has other children, and to reduce estate taxes (though estate taxes typically apply to large estates only).[0]

QTIP trusts are a type of testamentary trust, which means they take effect once the grantor — the creator of the trust — dies. The income the surviving spouse gets from the trust generally isn’t subject to estate tax. They’re also irrevocable, meaning they can’t be changed after they’re signed and funded.

Pros and cons of a QTIP trust

Provides for a surviving spouse. QTIPs ensure a spouse…

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This article was written by Dalia Ramirez and originally published on www.nerdwallet.com