With the complexities of estate planning, it can sometimes be difficult to understand the intricacies of each legal form or option. One such common form, the Qualified Terminable Interest Property (QTIP) Trust is an accessible and beneficial tool that can help protect your assets and control financial decisions after your passing. Here we will discuss what a QTIP trust is, how it benefits you, and what you need to know about the trust.
What Is a QTIP Trust?
A QTIP trust is a type of trust that allows for the control of a deceased person’s assets after they have passed away. It is often referred to as a “qualified” trust or “marital” trust because its main function is to provide protection to the surviving spouse after the death of the other spouse. When the deceased spouse has passed away, a QTIP trust allows them to set forth who receives what from their estate without the surviving spouse having to agree.
How Does a QTIP Trust Benefit You?
A QTIP trust provides the deceased spouse with security and flexibility by allowing them to control the distribution of their assets without the survivor’s agreement. Another benefit of a QTIP trust is that it gives the deceased spouse the opportunity to set up funds in the trust that are dedicated to providing the survivor’s financial security while still providing them with access to some of the trust’s assets. Additionally, the trust does not need to be taxable as the assets are already passing through the proper channels.
What You Need to Know About QTIP Trusts
It is important to note that a QTIP trust is not likely to be used for tax avoidance, so it should not be utilized with that intention in mind. Furthermore, all assets within a QTIP trust must pass to the surviving spouse upon the death of the first spouse. Lastly, it is important to consult with your estate planner to ensure that the appropriate plans and procedures are in place to protect your interests.
A QTIP trust provides a great tool for managing financial assets after the death of a spouse and can provide greater security and flexibility for both the survivors and the deceased. It is important to note the caveats of a QTIP trust and to make sure that you understand all of the nuances before entering into any estate planning activities.