You may have heard that it is best to incorporate a qualified terminable interest property (QTIP) trust into your estate plan if you are one part of a married couple and anticipate your spouse surviving you. But you may have heard similar a recommendation for other trusts, such as a revocable trust, marital trust, and asset protection trust. Read on to discover what circumstances make it best to establish a QTIP trust and how a seasoned Putnam County trusts attorney at The Law Office of Andres D. Gil, PLLC can help point out the right choice for you.
What is a QTIP trust and what are its requirements?
Firstly, a QTIP trust functions so that you (i.e., the grantor) may ensure that your surviving spouse has enough financial resources to support themself for the rest of their life. The way this is done is that your surviving spouse may receive an annual distribution from the funds you placed in the QTIP trust in the years following your unfortunate passing. And upon your surviving spouse’s unfortunate passing, your named beneficiaries (i.e., children and grandchildren) may receive the remaining funds.
Before pursuing a QTIP trust, you must confirm that your surviving spouse is a United States citizen and receives their own form of income at least once a year. What’s more, you must be okay with abiding by the following requirements:
- You must be okay with the fact that a QTIP trust cannot be changed once you have established it.
- You must be okay with the fact that a QTIP trust does not allow for any other beneficiaries while your spouse is still living.
- You must be okay with the fact that a QTIP allows your surviving spouse to have a fund manager convert non-income-generating principal into profitable property.
Under what circumstances is it best to establish a QTIP trust?
While there is no denying that a QTIP trust is an advantageous estate planning tool, so are other types of trusts. This is all to say that, when determining which type of trust is best to establish, it simply depends on what benefits you are looking to get out of it.
For example, unlike a revocable trust, a QTIP trust allows you to maintain control over how your assets are distributed even when you are no longer around.; rather than giving this authority to your surviving spouse. Also, unlike a marital trust, a QTIP trust allows you to choose the beneficiaries of your remaining assets; rather than leaving this decision to your surviving spouse. Lastly, unlike an asset protection trust, a QTIP trust allows you to protect your assets from the poor financial judgment of your surviving spouse.
At the end of the day, your establishment of a trust requires a competent Putnam County estate planning attorney in your corner. So please get in touch with us at The Law Office of Andres D. Gil, PLLC today.