What is a Qualified Terminable Interest Property (QTIP) Trust?

A Qualified Terminable Interest Property (QTIP) Trust is a specific type of trust that allows the grantor to provide income for a surviving spouse while maintaining control over the principal assets. This arrangement is particularly beneficial in situations where the grantor wants to ensure that their spouse receives income from the trust during their lifetime, but ultimately wants the remaining assets to go to other beneficiaries, such as children from a previous relationship, after the spouse passes away.

One of the primary advantages of a QTIP Trust is that it qualifies for the marital deduction, meaning that the value of the trust's assets is not included in the estate of the deceased spouse for estate tax purposes at the time of their death. The trust can provide the surviving spouse with income for their needs, and since it does not require the principal to be distributed to the spouse, the grantor can control the ultimate distribution of those assets.

The other options do not accurately describe the purpose or function of a QTIP Trust. Some trusts do provide immediate distribution to beneficiaries, but that is not the defining feature of a QTIP Trust. Similarly, while there are trusts for charitable distributions, that is not the focus of a QTIP Trust. Finally, while QTIP Trusts can provide tax benefits,