Blended Families Benefit From the QTIP

A type of trust known as a qualified terminable interest property (QTIP) trust is a popular estate planning tool often used for second marriages. If you want to provide for your spouse but still have ultimate control over where the trust principal is distributed, this trust may be for you.

With a QTIP trust, you place assets in trust and your spouse can use the income during his or her lifetime. Your spouse may also access the trust principal in certain circumstances. At your spouse's death, the assets will pass as you designate, perhaps to your children from a former marriage, grandchildren or a charitable organization like your favorite charitable organizations.

The QTIP assets qualify for the estate tax marital deduction but are included in the surviving spouse's estate. Also, income distributed to your spouse is fully taxable, and the QTIP trust itself is taxable, including capital gains not distributed by the trust.

If assets pass to your favorite charitable organizations, a charitable QTIP trust provides no income tax deduction to you, but your spouse's estate receives an estate tax charitable deduction.

However your remaining assets are distributed, rest assured that by taking the extra step to set up a QTIP in your will or trust now, your wishes will be carried out after you are gone.

Please contact Mary Ludwig, Development Director at 712-732-5127, for more information.

The information on this site is not intended as legal, tax or investment advice. For such advice, please consult an attorney, tax professional or investment professional.

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