In a qualified terminable interest property trust, a grantor obtains a marital deduction for assets held in trust for the grantor’s spouse while retaining some control over the trust assets without the assets being in the grantor’s estate. This is especially in the event of a second marriage when a spouse wants to provide for the surviving spouse while still leaving most of the trust assets to any surviving children or dependents.

In a Q-tip trust, as the property passes from the deceased person the surviving spouse has an income interest for life. This means that all income or a specified amount is payable annually or at a rate set up by the trust to the surviving spouse for his or her lifetime. No person other than the surviving spouse can appoint property to any person other than the spouse during his or her lifetime. Use a Q-tip Trust to:

1. Provide for a second or subsequent spouse for that spouse’s lifetime.

2. Protect the surviving spouse from poor Q-Tip Trust management decisions, creditors or the influences of a new spouse.

3. Preserve maximum flexibility of post death planning options.

Action Steps
The best contacts and resources to help you get it done

Create Q-Tip Trust documents with online tools and resources

Q-tip trusts are complicated, but with the right online tools, forms and instructions it is possible to do them yourself. Do it yourself trusts are also a great resource when time is an issue and a trip to the attorneys office isn't possible.

I recommend: Rocket Lawyer provides online services for creating a marital trust, which is a type of Q-Tip Trust. All About Forms has online documents for preparing a Q-Tip Trust.

Find professional Q-Tip Trust advice from specialists in Q-Tip Trusts

Because a Q-Tip has certain weaknesses when the spouse beneficiary is also a trustee, it's important to get the right advice from a trust specialist. Trust and estate attorneys have the right Q-Tip Trust information to answer any questions.

I recommend: Visit both the American Bar Association and The American Academy of Estate Planning Attorneys Lawyer Locator section. Click on the state in which you live on The American Academy of Estate Planning Attorneys website. Click on both the state you live in and the words "Estate Planning" or "Trusts and Estates" in the practice areas section on the ABA site to connect to find a trust and estate attorney near you.

Work with a Q-Tip Trust expert for maximum flexibility in post death planning

Q-Tip elections can take up to 15 months after a grantor's death, while disclaimers happen within nine months of death. Use partial elections to maximize the marital deduction amount, to balance the taxable estates of both spouses, to take advantage of lower alternate valuations or to reduce a surviving spouse's estate. Trust and estate experts are aware of all these conditions and design Q-Tip trusts to maximize their benefits.

I recommend: Pepper Hamilton is a nationwide organization specializing in wealth preservation and estate planning. They have offices in Michigan, California, Pennsylvania and New York. Dickinson Wright has locations throughout the US and is a leader in trust work.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  When planning your Q-Tip Trust management, make sure your Q-Tip trust gives power to compel the trustee to make trust assets income producing.
• •  Consider a limited power of appointment to the spouse beneficiary to provide control and flexibility of distributions after death of the first spouse.
• •  The QTip Trust should clarify that the trustee will pay estate taxes of the surviving spouse on Q-Tip property included in the surviving spouse's estate.