Complete Guide to Estate Planning

When you've worked decades to build wealth, you want to ensure your spouse is cared for after you're gone—but you also want control over where your assets ultimately land. A qualified terminable interest property trust offers married couples a powerful tool to accomplish both goals while deferring significant estate tax liability.

QTIP trusts have become essential planning vehicles for second marriages, blended families, and estates large enough to trigger federal or state estate taxes. Understanding how these trusts work, when they make sense, and how to implement them properly can save your heirs hundreds of thousands of dollars while preventing family conflicts over inheritance.

What Is a QTIP Trust and How Does It Work?

A qualified terminable interest property trust is an irrevocable trust that provides income to a surviving spouse for life while allowing the first spouse to die to control who receives the remaining assets after the survivor's death. The trust qualifies for the unlimited marital deduction, meaning assets transferred into it aren't subject to estate tax when the first spouse dies.

Here's the basic mechanic: Your will or revocable living trust creates the QTIP trust upon your death. The trust must pay all income to your surviving spouse at least annually. Your spouse cannot change the final beneficiaries you've named—typically children from a prior marriage or other family members. When your spouse dies, the remaining trust assets pass to those predetermined be...