Why You Might Want A QTIP Trust
You may not spend a lot of time thinking about Lifetime QTIP trusts. In fact, it’s very likely you’ve never heard of one. However, for the right person, this type of trust can be a very powerful tool that helps cement your legacy with your family. But, first, you need to know a little more about Lifetime QTIP trusts and when to use them.
Qualified Terminable Interest Property (QTIP)
A QTIP trust allows the trust maker (the grantor) to provide for a surviving spouse. The grantor also controls how the trust assets are distributed once the surviving spouse passes away.
Let’s say Frank and Martha are married. It’s the second marriage for both of them, and they both have children from their previous relationships. Martha is much wealthier than Frank. Martha sets up a QTIP trust so Frank can benefit from her wealth after she is gone. He receives income from the trust, and principal if needed, and lives comfortably. However, when Frank passes away, the trust assets don’t become part of his estate. Instead, the assets pass to the beneficiaries Martha named in the trust, probably her children from the previous marriage.
Other Advantages Of QTIP Trusts
While QTIPS are often used when spouses have children from previous marriages, that’s not the only benefit.
- QTIP trusts can also provide relief from applicable death and gift taxes.
- Should the surviving spouse remarry, the assets don’t transfer over to the new spouse or their family.
- The trust is protected from the surviving spouse’s creditors.
- Payments are not transferable.
- As will most trusts, the trust records remain private.
Learn More About Trusts & Your Estate
You may consult with an attorney and learn that QTIP trusts are not the best solution for you. But there are other estate planning tools that may help you and your loved ones.
The attorneys at Keystone Law Firm use their estate planning experience to help clients like you develop complete, appropriate personal estate plans. Call us at (480) 418-8448. We offer services for clients throughout Arizona, including Chandler, Gilbert, Sun Lakes, Tempe, Phoenix, Mesa, Scottsdale, and Apache Junction.