What is a QTIP trust estate plan?
QTIP Trust in Estate Planning Estate planning furnishes several benefits for those individuals with considerable wealth and assets to their name. When done well, it can provide a great opportunity for couples to lower or even get rid of their estate’s tax burden.
How does a surviving spouse benefit from a QTIP?
This can prevent these assets from transferring to the living spouse’s new spouse, should she remarry. The property within the QTIP providing funds to a surviving spouse qualifies for marital deductions, meaning the value of the trust is not taxable after the first spouse’s death.
What is a QTIP and why do I need one?
As one might expect, QTIPs can also help alleviate any worry or fear a spouse may have about an unscrupulous significant other attempting to exploit their surviving spouse and swindle him or her out of the assets of the trust.
What is a ‘qualified terminable interest Property Trust’?
What is a ‘Qualified Terminable Interest Property (QTIP) Trust’. A qualified terminable interest property enables the grantor to provide for a surviving spouse and maintain control of how the trust’s assets are distributed once the surviving spouse dies. Income, and sometimes principal, generated from the trust is given to…
Can a non-US citizen inherit from a QTIP trust?
You can get the estate tax benefits of a QTIP trust only if your spouse is a U.S. citizen. The marital deduction (the rule that lets surviving spouses inherit any amount from the deceased spouse free of estate tax) is key to the QTIP, and it doesn’t apply to noncitizens.
What happens to a QTIP when the first spouse dies?
When the first spouse dies, the survivor gets what’s called a “life estate” in the assets that are left to the QTIP trust—that is, the survivor is entitled to any income the assets produce, and in the case of real estate, to its use. Only the surviving spouse can be named as the life beneficiary.