The acronym QTIP may conjure certain images outside of an estate planning context. For our purposes as estate planning attorneys, the acronym stands for a qualified terminable interest property trust. This type of trust can be useful if you are a parent who is getting remarried.
Protecting Your Children
If you are getting remarried as a parent, you may have estate planning concerns. Clearly, you want to make sure that you provide resources for your new spouse to draw from after you are gone if you do in fact die first.
At the same time, you never know what the future may hold. Your surviving spouse could get remarried, and he or she may not be particularly passionate about making sure that your children are provided for after your passing.
To account for this type of situation, you could create a QTIP trust. The way that it works is you fund the trust, and you name a trustee to administer the trust after you pass away. It would be possible to name an individual that you know personally, but there can be certain drawbacks if you go this route. Many people choose to utilize a corporate trustee like a trust company.
Your spouse would be the first beneficiary of the QTIP trust. If you do in fact predecease your spouse, the trustee could distribute the earnings of the trust to your spouse throughout the rest of his or her life. It would also be possible to empower the trustee to distribute portions of the principal under some circumstances if this is your choice.
The purpose of the trust is to protect the interests of your children, so you would name your children as the secondary beneficiaries. If you pass away before your spouse, your spouse would receive income from the trust’s earnings, but he or she could not change the secondary beneficiary designations.
After the passing of your surviving spouse, your children would inherit the assets that remain in the qualified terminable interest property trust.
Build on Your Knowledge
Now that you have learned a bit about QTIP trusts, you may wonder about the other estate planning devices that can be utilized to address certain estate planning objectives that you may have. If you would like to build on your knowledge, there is a portion of this website that you may want to browse.
Our firm has prepared a series of special reports that cover numerous different estate planning topics. The reports are free, and you can download any or all of them at your convenience.
To see the complete list of titles, click this link and follow the simple instructions: Free Estate Planning Reports.
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