How a QTIP Works
At the first death, assets are funded into the QTIP. The surviving spouse receives all income for life and may also receive principal under the trustee's discretion. The trust qualifies for the federal marital deduction, deferring estate tax until the second death. At the survivor's death, the remaining principal passes to beneficiaries chosen by the first spouse.
Why It Helps Blended Families
In second marriages, each spouse often wants to provide for the other but ultimately leave assets to their own children. A QTIP guarantees lifetime income for the surviving spouse without giving the survivor power to redirect the principal. The first spouse's children remain protected.
Tax Considerations
The QTIP is included in the surviving spouse's taxable estate, so it does not avoid estate tax permanently; it postpones it. Combined with portability and proper exemption planning, it offers strong control plus tax efficiency.
Arizona Spousal Protections
The QTIP must be coordinated with Arizona spousal protections in A.R.S. 14-2401 so the surviving spouse receives the support the trust is meant to provide.