Qtip Trust Requirements
Description
How to fill out Inter Vivos QTIP Trust With Principal To Donor's Children On Spouse's Death?
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FAQ
An Example of a QTIP Marital Trust He has two children from a previous marriage. The QTIP trust names his wife and his son as Co-Trustees. The Trust gives all the income earned therefrom to his wife, and also allows for principal distributions to her for her health, education, maintenance or support.
Legally, to qualify as a QTIP trust, the trust is required to pay all of its income to the spouse beneficiary, and there can't be any other beneficiaries during that spouse's lifetime. This allows couples to ensure that a spouse is taken care of financially.
The grantor spouse (usually the wealthier spouse) puts property into the QTIP trust for the benefit of the other spouse (the ?beneficiary?) during the beneficiary spouse's lifetime. At the beneficiary spouse's death, the trust's remainder will go to the grantor spouse's children or wherever the grantor has decided.
To create a QTIP trust, you'll make a QTIP election on IRS estate tax return form 706. List the chosen assets (called the ?qualified terminable interest property?) and their value on Part A of Schedule M. There are a few requirements: The surviving spouse must be a U.S. citizen.
John and Mary are in their second marriage. John has children from his first marriage and wants to ensure they inherit his estate after his and Mary's death. He creates a QTIP Trust which will provide Mary with income for life after his death, and upon Mary's death, the remaining assets will go to his children.