QTIP Trust Legal Meaning and Definition

Here is a simplified definition of the legal term QTIP Trust.

QTIP Trust (noun)

A type of trust that allows a person to leave assets to their partner (often their spouse) while still maintaining control over those assets. The spouse can receive income from this trust and, upon their passing, the remainder of the trust will go to the designated beneficiaries set by the creator of the trust. The beneficiaries then need to pay any necessary estate taxes. This trust is particularly appealing for individuals who want to ensure the financial security of their surviving spouse, but also want to control the distribution of their wealth after the spouse's passing. It also offers estate tax advantages. The term "QTIP" stands for "Qualified Terminable Interest Property."