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A QTIP trust, short for qualified terminable interest property trust, is an estate planning vehicle that lets you provide income for your surviving spouse while retaining control over who ultimately inherits your assets after the spouse dies. You transfer assets into the trust at death, the surviving spouse receives all income generated by those assets for life, and when the spouse dies, the remaining assets pass to the beneficiaries you named when you created the trust, not whoever the spouse might choose.
Think of it as a two-stage inheritance: your spouse receives the earnings, and your children receive the principal.
Assets placed in a QTIP trust qualify for the federal estate tax unlimited marital deduction. This means when you die, those assets pass to the trust estate-tax free, regardless of the amount. The tax bill is deferred, not eliminated: when the surviving spouse dies, the full value of the trust is included in their taxable estate. At that point, estate taxes on the remaining assets may apply depending on the size of the combined estate and the exemption in place at the time.
The estate tax exemption was $13.99 million per individual in 2025 and increases to $15 million in 2026. For large estates approaching or exceeding those thresholds, QTIP trusts provide meaningful deferral and planning flexibility.
Three conditions must be met for a trust to qualify for QTIP status and access the marital deduction.
The surviving spouse must be a U.S. citizen. If they are not, a specialized version called a qualified domestic trust is required instead.
Without a QTIP trust, a surviving spouse who inherits assets outright controls what happens to them. That spouse can remarry, change beneficiaries, or spend the assets, potentially leaving nothing for children from the first marriage. A QTIP trust eliminates that risk. The grantor spouse locks in the final beneficiaries at trust creation, and the surviving spouse cannot override that decision regardless of what happens later.
This is why estate planning attorneys routinely recommend QTIP trusts for any second marriage where one or both spouses have children from prior relationships.
The surviving spouse has a guaranteed income stream for life and, if the trust document permits it, limited access to principal for specific purposes such as health, education, maintenance, or support. What the surviving spouse cannot do is change the ultimate beneficiaries, sell trust assets for personal gain, or direct the principal away from the intended heirs.
Some QTIP trusts grant the surviving spouse a limited power of appointment: the ability to redirect the remaining assets among a defined group of permitted beneficiaries, such as the grantor's children, rather than to anyone the spouse chooses. This provides some flexibility while keeping the assets within the original grantor's intended family.
The executor does not have to elect QTIP treatment for the entire trust. A partial QTIP election allows the executor to decide, after the first spouse's death, how much of the estate should be sheltered by the marital deduction and how much should be taxed immediately using the first spouse's remaining exemption. This flexibility allows a skilled executor to minimize the combined estate taxes paid by both spouses over time, which can be significant when estate tax rates and exemptions are uncertain.
With deep roots in traditional finance and the digital asset industry, Acquire.Fi operates as a specialist M&A advisory firm. Coverage spans M&A, secondaries, OTC, and capital markets advisory across digital assets and frontier tech. Decades of combined experience across every stage of the deal lifecycle.
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