The Benefits of a QTIP Trust

The QTIP trust is one of the most useful tools for building your estate plan. The acronym stands for Qualified Terminable Interest Property and is straight out of the Internal Revenue Code. This is the kind of trust that qualifies for the federal estate tax marital deduction by giving your spouse income for life but no control over the principal.

How a QTIP Trust Can Help
A traditional estate trust that qualifies for the marital deduction can protect your principal during your surviving spouse's lifetime. Under this plan, you must give him or her the right to choose the eventual beneficiaries at his or her own death. The QTIP trust, however, ensures that your wishes are carried out. It qualifies for the marital deduction without ever giving your spouse control over principal.

The trust income will be paid to your spouse for life. And you can give your trustee discretion to supplement this from principal if needed to maintain a proper standard of living. After your spouse's lifetime, the balance will be distributed to those you have named.

For greater flexibility, you can give your spouse the power to adjust the shares passing to children, grandchildren or charitable organizations like Sisters Hospital Foundation.

Please call Julie Snyder at 716-862-1992, or e-mail us at jsnyder@chsbuffalo.org, for more information.

The information in this Web site is not intended as legal advice. For legal advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income tax include federal taxes only. Individual state taxes and/or state law may impact your results.