Beyond Your First Marriage, a QTIP Can Protect Your Current Spouse And Your Children

Although the overall rate of divorce has been declining, among older Americans the opposite is true. Since 1990, the divorce rate for those over 50 has doubled, and has tripled for those over 65, according to the Pew Research Center.

For older individuals, particularly those with considerable assets, multiple ex-spouses and potential heirs, careful estate planning not only is critical, but extremely considerate, as it can avoid future heartache and lawsuits. An estate vehicle that should be considered is a Qualified Terminable Interest Property trust (QTIP).

A QTIP is a marital trust that is exclusively for the benefit of a surviving spouse during his or her lifetime, and therefore qualifies for the marital deduction. This is important for estate tax purposes, as a bequest to a US citizen spouse, outright or in a marital trust, has an unlimited exemption from estate taxes. In order to qualify for this unlimited exemption, a marital trust must distribute all income to the sole current beneficiary, the surviving spouse, at least quarterly.

The QTIP is often (but not always) set up as a testamentary trust, which means it is created by your will, and comes into existence upon death. A QTIP should have at least one independent trustee that could serve with the surviving spouse. The trustees adhere to the terms of the trust, most often a combination of mandatory and discretionary provisions.

A QTIP trust serves several purposes. It provides lifetime income for the surviving spouse which, for many, is the primary purpose. Principal may or may not be invaded for the sole benefit of the spouse, depending on the terms of the trust.

A key feature of a QTIP is that, upon the death of the surviving spouse, the remaining principal is distributed according to its terms, which have been stated by the grantor, not the surviving spouse. This particular quality of a QTIP is extremely valuable for successor marriages. The grantor can gain comfort in knowing a surviving spouse is protected for his or her lifetime, yet is assured that, upon the spouse’s passing, the ultimate beneficiary(ies), often children from a prior marriage, will inherit the remaining principal. Compare a QTIP to an outright bequest to a surviving successor spouse: Unlike a QTIP, the choice of future beneficiaries rests with the successor spouse, not the grantor. This particular feature often becomes very important when there are children from prior marriages.

Further, a QTIP has the ability to defer estate taxes until the passing of the surviving spouse. While the recent change in tax law raised the estate tax exemption to $11.2 million (double for a married couple), for those who have a taxable estate, a QTIP is a means of deferring taxes on your children’s inheritance.

In situations that involve multiple potential heirs from multiple marriages, a QTIP provides clearly defined guidelines that protect a current spouse while eliminating the possibility of children being disinherited.

This article was written by Rob Clarfeld from Forbes and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to

The views expressed by the author are not necessarily those of Fifth Third Bank and are solely the opinions of the author. This article is for informational purposes only. It does not constitute the rendering of legal, accounting, or other professional services by Fifth Third Bank, National Association or any of their subsidiaries or affiliates, and are provided without any warranty whatsoever. Deposit and credit products provided by Fifth Third Bank.