What is a Qualified Terminable Interest Property Trust?
For high net worth individuals and families in New Jersey, a crucial component of the estate planning process is ensuring that wealth can pass smoothly to family members and that your assets will be able to provide for loved ones immediately after your death, as well as into future generations where possible. There are various types of estate planning tools that may be relevant to you, and an experienced Summit estate planning lawyer will be able to assess your particular circumstances and provide you with bespoke advice. In the meantime, we want to tell you more about one type of trust known as a qualified terminable interest property (QTIP) trust.
This type of trust allows a married person to ensure that their spouse is provided for, while also ensuring that other beneficiaries and future generations will also be able to benefit.
How Does a QTIP Trust Work?
A QTIP trust allows an individual to preserve family wealth while also making sure that their spouse, and subsequent generations, are provided for. This type of trust allows the grantor (the party making the trust) to provide income for a surviving spouse during that spouse’s lifetime, while also controlling decisions about the subsequent distribution of assets, such as to adult children, grandchildren, nieces, nephews, and other parties.
This type of trust can be funded with a range of assets, from real property to securities.
Benefits of a QTIP Trust
There are a range of benefits associated with QTIP trusts, including but not limited to the following:
- Spouse can have necessary assets without those assets being subject to the estate tax upon the grantor’s death (this type of trust essentially allows the surviving spouse to defer estate taxes until their own death, which also means minimizing estate tax);
- Surviving spouse can have an income from the trust for the rest of their life;
- Assets held in a QTIP trust will usually be protected from creditors of the surviving spouse (thus ensuring that other beneficiaries also benefit from the trust); and
- Grantor can ensure that their spouse, as well as many other beneficiaries if they so desire, will be accommodated.
These types of trusts are especially common and useful among remarried couples or blended families where there are children and other descendants from other relationships. A remarried grantor can make sure that a spouse is covered financially while also making certain that children from past relationships receive assets.
Contact a Summit, New Jersey Estate Planning Attorney
There are many different types of asset protection strategies that you may be able to employ in your own estate planning. Whether a QTIP, or another type of asset protection trust, is right for you or not is something that you should discuss with an experienced lawyer. One of the experienced Summit estate planning attorneys at Dempsey, Dempsey & Sheehan can speak with you today about QTIPs and other types of trusts that you may want to consider, as well as other asset protection and estate planning strategies in New Jersey. Contact us to learn more about how we can assist you.
Sources:
law.justia.com/codes/new-jersey/title-3b/
law.cornell.edu/wex/qualified_terminable_interest_property_(qtip)_trust
