Why Establish a QTIP Trust?
There are two main reasons why a married individual would choose to establish a QTIP trust. First, it may be unclear what your estate tax situation will be at the time the trust is put into effect. It may be prudent to provide flexibility for your Executor to elect between claiming a marital deduction for the amounts transferred to the QTIP or forego that deduction. This will allow your Executor to minimize the total estate tax paid by the two spouses combined by choosing to defer the tax on some, but not all, of the assets transferred in trust to a spouse. In other words, your Executor can choose the estate tax treatment of the QTIP trust to reflect changes in the applicable tax laws or changes in the value of your assets since you last made your will. It may also be beneficial if your surviving spouse already has significant personal assets. In that case, your Executor can take advantage of the graduated tax brackets in the estate tax law for both of you, in turn reducing the overall