Legal Definitions - QTIP trust

A QTIP trust is a type of trust that allows a person to provide for their spouse after they pass away while still controlling how their assets are distributed. QTIP stands for qualified terminable interest property trust.

For example, let's say John creates a QTIP trust and names his wife, Jane, as the beneficiary. When John passes away, Jane will receive income from the trust for the rest of her life. However, John can also specify how the remaining assets in the trust will be distributed after Jane's death, such as to their children or other beneficiaries.

One important thing to note is that the assets in a QTIP trust are subject to estate taxes. However, this type of trust can be useful for couples who want to provide for each other while still maintaining control over their assets.