What does a grantor typically do in a QTIP Trust?

In a QTIP Trust, the primary function of the grantor is to provide income for the surviving spouse while retaining control over the principal assets for the duration of the spouse's lifetime. This type of trust is specifically designed to allow the grantor to ensure that the surviving spouse receives income generated by the trust assets, thereby providing financial support.

The grantor retains control over the principal of the trust, which means that upon the death of the surviving spouse, the remaining assets will be distributed according to the grantor's wishes, often to other beneficiaries such as children or other heirs. This structure is beneficial as it allows the grantor to benefit from estate tax advantages, since the assets in a QTIP Trust can qualify for the marital deduction while still maintaining a level of control over how those assets are ultimately distributed.

The other options do not reflect the nature of a QTIP Trust. For instance, avoiding all estate taxes entirely is not feasible, as there are specific tax implications associated with such trusts. Distributing assets immediately to heirs would contradict the purpose of providing for the surviving spouse, and handing over all authority to the trustee without conditions would negate the grantor's intent to maintain control over the principal assets.