The Qualified Terminable Interest Property Trust, commonly called a QTIP, can defer death taxes at the death of the first spouse, without transferring the decedent’s share outright to the surviving spouse.
The QTIP Trust is generally used in conjunction with a Credit Shelter Trust.
Perhaps the major advantage of the QTIP Trust is the decedent’s ability to control who will receive the principal of his or her trust estate after the demise of his or her surviving spouse.
This Trust is particularly useful in protecting children of a prior marriage from being cut off by the surviving stepparent spouse.
It also reduces the possibility of the estate passing to a subsequent marriage partner or “close friend” of the surviving spouse.