QTIP trust

QTIP trust is an abbreviation for qualified terminable interest property trust . Terminable property interests are interests that will terminate after a period of time or on a contingency, such as life estates , terms for years, annuities , patents , and copyrights . Most terminable property interests do not qualify for the marital deduction when transferred to a spouse, therefore triggering gift and estate taxes . QTIP trusts allow spouses to place terminable property interests in a trust for the benefiting spouse to receive with beneficial tax treatment. The QTIP trust assets apply to the benefiting spouse’s applicable exclusion amount and the benefiting spouse will receive lifetime payments from the assets’ income.

See, e.g. Wells Fargo Bank New Mexico, N.A. v. United States , 319 F.3d 1222 (10th Cir. 2003) .

See also: qualified domestic trust ; estates and trusts

[Last reviewed in August of 2023 by the Wex Definitions Team ]

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