QTIP Trust
A Qualified Terminable Interest Property trust that provides income to a surviving spouse for life while preserving the remaining assets for other beneficiaries (typically children from a prior marriage). It qualifies for the marital deduction.
Legal Definition
A trust qualifying under IRC ยง2056(b)(7) for the marital deduction in which the surviving spouse is entitled to all income for life, payable at least annually, and no person has a power to appoint any part of the property to any person other than the surviving spouse during the spouse's lifetime.
Practical Example
Bob, who has children from his first marriage, creates a QTIP trust in his will. His second wife receives all income from the trust for her lifetime. When she dies, the remaining assets pass to Bob's children from his first marriage.