Qualified Terminable Interest Property Trust

Also known as: QTIP Trust

In one sentence

A trust that lets a surviving spouse receive income while preserving assets for other heirs.

Plain English

A QTIP Trust is a special estate planning tool that splits property into two parts: the surviving spouse gets all the income from the assets during their lifetime, but when they die, the remaining property goes to whoever the original owner designated (often children). This arrangement lets you provide for your spouse while ensuring your children eventually inherit the bulk of the estate. It also offers significant tax benefits because the assets don't get taxed again when the surviving spouse passes away.

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Example

John creates a QTIP Trust with $2 million in stocks and real estate. His wife Mary receives all dividends and rental income for her lifetime. When Mary dies, the remaining assets go to John's adult children from his first marriage, exactly as John planned.

Used in a sentence

“The couple used a Qualified Terminable Interest Property Trust to balance the surviving spouse's financial security with their children's inheritance expectations.”

Related terms

Trust Instrument

The legal document that creates a trust and outlines how assets will be managed and distributed.

Testamentary Capacity

The legal and mental ability required to make a valid will or trust.

Intestate Succession

The legal process of distributing a deceased person's property when they leave no valid will.

Charitable Trust

A trust that provides income to beneficiaries while ultimately donating the remaining assets to charity.

In Terrorem Clause

A will provision that punishes beneficiaries who challenge the will by cutting off their inheritance.

Intended Beneficiary

A person who is not a party to a contract but has the right to enforce it because the parties meant to benefit them.

Probate

The court process of validating a will and distributing a deceased person's estate.

Elective Share

A surviving spouse's right to claim a portion of the deceased spouse's estate despite the will.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.