What does QTIP stand for in trust terminology?

What does QTIP stand for in trust terminology?

• A. Qualified Terminable Interest Property trust
• B. Quick Transfer Interest Property
• C. Qualified Trust for Immediate Payment
• D. Qualified Terms of Interest Property

Answer: (A)

QTIP stands for Qualified Terminable Interest Property. It’s a type of trust used at the first spouse’s death to provide for the surviving spouse while still letting the grantor control who eventually receives the assets. The defining feature is that the surviving spouse must receive all income from the trust, at least annually, for life, but the right to that income ends at death (or under other terms set in the trust). This setup allows the trust to qualify for the marital deduction, meaning the assets can pass to the spouse without federal estate tax at the first death, while still keeping the principal to be directed to other beneficiaries after the surviving spouse dies. The trust assets remain part of the deceased spouse’s estate for tax purposes, even though they go to the spouse tax-free for the life of the survivor. The term “Qualified” refers to meeting IRS requirements to qualify for the marital deduction. The other phrasings aren’t standard terms in trust vocabulary and don’t describe this arrangement.

QTIP stands for Qualified Terminable Interest Property. It’s a type of trust used at the first spouse’s death to provide for the surviving spouse while still letting the grantor control who eventually receives the assets. The defining feature is that the surviving spouse must receive all income from the trust, at least annually, for life, but the right to that income ends at death (or under other terms set in the trust). This setup allows the trust to qualify for the marital deduction, meaning the assets can pass to the spouse without federal estate tax at the first death, while still keeping the principal to be directed to other beneficiaries after the surviving spouse dies. The trust assets remain part of the deceased spouse’s estate for tax purposes, even though they go to the spouse tax-free for the life of the survivor. The term “Qualified” refers to meeting IRS requirements to qualify for the marital deduction.

The other phrasings aren’t standard terms in trust vocabulary and don’t describe this arrangement.