AN ESTATE PLANNING ACRONYM- QTIP
Estate planners love acronyms, and one of the most common when referring to a particular type of trust is QTIP, which stands for Qualified Terminable Interest Property. A QTIP trust provides a way for someone to leave property in a trust or a spouse free of tax by way of the unlimited marital deduction, but yet control where the assets go at the death of the spouse. The QTIP assets are included in the estate of the surviving spouse for estate tax purposes even though he or she has little or no control over them.
As you can imagine, This Trusts are especially favored in second marriages where there are children from the first marriage. This article on bankrate.com discusses estate planning in second marriages, including QTIP Trusts. However, the article fails to mention the use of Credit-Shelter (or Bypass) Trusts, which can also provide support for the surviving spouse but are used in larger estates because the assets are sheltered from estate taxes at the death of the second spouse to die.
Reference: Trust Counsel; North Carolina Estate Planning Blog
Filed Under: Estate Planning; Qualified Terminable Interest Property; QTIP
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