QTIP Trust

(Qualified Terminable Interest Property)

A QTIP Trust can protect your surviving spouse and other members of your family after you pass.  The qualified terminable interest property enables you, the grantor, to provide for your surviving spouse and maintain control of how the trust's assets are distributed without incurring the federal gift tax.  This also determines how your assets are split up after your spouse dies.  Under a QTIP, income is paid to your surviving spouse while the money is held in trust.  The balance, or whatever is left, will be paid out to other beneficiaries specified by you, the grantor, at the time of your surviving spouse's passing.  

Control the ultimate distribution of assets after the death of your surviving spouse

By having a QTIP Trust, you are deciding who gets the remaining assets after your spouse passes away as well.  This is an irrevocable trust which is unable to be altered.  Your spouse cannot change or be influenced by others to alter to the disposition of the couple's assets.  The QTIP Trust ensures the assets will pass to whoever you designate in the document to receive the remaining assets. 

Protect your spouse from bad financial decisions

You may be concerned your spouse will not make the best financial decisions after you pass.  They may be wrongfully influenced by family or a financial advisor.  The QTIP trust insulates the spouse and inheritance from this possibility.  The QTIP provides specific instructions and guidance to a professional trustee to help the spouse protect the principal. 

Avoid Estate Tax for your Spouse

Instead of making outright gift of assets during your lifetime or passing control to other members of your family, the QTIP will save the federal tax exclusion amounts for both spouses.  In 2019 the federal estate tax exemption is $11.4 million per spouse.  If you have more than $11.4 you will have to pay federal taxes if your estate is not set up in a trust and you must file a federal estate tax return using IRA Form 706.  Florida does not have a state estate tax nor a state inheritance tax.  

How does a QTIP Trust Work?

In its most basic form, a QTIP trust is essentially an A/B trust arrangement that is more restrictive than a maritial trust.  In most A/B trust agreements, the maritial, or A portion of the trust, is fully accessible by the surviving spouse.  A QTIP trust provides limited access to the trusts assets for the surviving spouse.  There are no estate taxes due on the assets that go in the trust.  

If you have further questions on this form of estate planning or are interested in setting one up, please call the office to schedule an apointment at 941-256-3965.