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QTIP Trust

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Inter Vivos QTIP Trust with Principal to Donor's Children on Spouse's Death

This Trust Agreement is made on (date), between of County, State of , hereinafter referred to as the Donor, and , a banking corporation organized and existing under the laws of the United States with its principal office located at .

The Donor, in consideration of the agreements and undertakings made by the Trustee, and other good and valuable consideration, does assign, transfer, and set over to the Trustee, and its successors, the property listed in Schedule A, which is attached and incorporated by reference, to hold, manage, and dispose of the same for the uses and purposes set forth below.

Article 1. Disposition of Principal and Income

A. Such property shall be held in trust, which Trust shall be designated the Marital Trust (and shall be referred to below as the Marital Trust) for the following uses and purposes:

1. All of the net income from the entire Marital Trust shall be paid to the Donor's Wife annually or at more frequent intervals so long as the Donor's Wife shall live.

2. The Donor's Wife shall have, in all events, the power to require, by written notice, the Trustee of the Marital Trust to convert any unproductive property to productive property within a reasonable period of time.

3. The Trustee of the Marital Trust may, from time to time, in its absolute discretion, pay or distribute to the Donor's Wife such amount or assets out of the principal of the Marital Trust as it may deem appropriate.

4. On the death of the Donor's Wife, an amount equal to the additional federal estate and inheritance taxes imposed on the Estate of Donor's Wife shall be paid by this Trust in satisfaction of the taxes.

B. On the death of the Donor's Wife, the then remaining principal of the Trust shall be divided by the Trustee into as many equal shares as there shall be children of the Donor then surviving and deceased children of the Donor leaving issue then surviving, each of which shares shall be held and administered as follows:

1. One such share shall be paid and distributed to each of the then surviving children of the Donor and one such share, per stirpes, to the then surviving issue of each then deceased child of the Donor; provided, however, that if any such child of the Donor shall not have attained the age of years, or if any child of a deceased child of the Donor shall not then have attained the age of 21 years, the share or partial share shall continue to be held as a separate and distinct Trust.

b. When any child of the Donor with whose name such a Trust is designated shall have attained the age of years, of the principal of the Trust designated with the name of the child shall be paid and distributed to that child; when any child shall have attained the age of years, of the remaining balance of the principal of the Trust shall be paid and distributed to the child.

c. When any child of the Donor with whose name such a Trust is designated shall have attained the age of years, or when any grandchild of the Donor with whose name such a Trust is designated shall have attained the age of 21 years, the entire remaining principal shall be paid and distributed.

d. If any child of the Donor with whose name such a Trust is designated shall die prior to the termination of the Trust, the entire principal of the Trust shall be paid and distributed to the estate of the child of the Donor.

e. If any grandchild of the Donor with whose name such a Trust is designated shall die prior to the termination of the Trust, the entire principal of the Trust designated with the name of the grandchild shall be paid and distributed to the estate of the grandchild.

C. If at any time after the death of the Donor's Wife, there shall be no beneficiary eligible to receive the income or principal of any Trust created under this agreement, then the entire principal of the Trust shall be paid and distributed according to the laws of relating to the distribution of intestate personal property.

D. With respect to any Trust or Trust fund created under this Article 1, the Trustee may pay to or apply for the benefit of any beneficiary currently eligible to receive the income or any part of it arising from any such Trust fund such amounts out of the principal as the Trustee in its absolute discretion may deem appropriate.

E. All interest, both in income and in principal, in all Trusts created in this Article 1 are intended for the personal protection and welfare of the beneficiaries of the Trusts.

F. Any of the Trusts created under this Article 1 may be terminated, in whole or in part, at any time after the death of the Donor's Wife, if such action is deemed advisable and for the best interests of the Trust or Trusts.

G. Any person may irrevocably disclaim and renounce any part or all of any gift made to the person by this Article.

H. Notwithstanding any other provision of this instrument, if on the expiration of the period of twenty years and eleven months following the death of the last survivor of the Donor, the Donor's Wife and the Donor's issue living on the day preceding execution of this instrument, any Trust created by this instrument shall then remain in existence, then the Trust or part of it shall promptly be paid and distributed to the person with whose name the Trust is designated.

Article 2. Additions to Trust

The Donor or any other person or organization may, at any time, give, transfer, or bequeath to this Trust additional money or property of any kind acceptable to the Trustee.

Article 3. Discretion of Trustee

In making any division or apportionment of any Trust created by this instrument, the Trustee shall not be required to convert property into money, but may allot any part of any item of property to any fund or beneficiary provided for by this instrument.

Article 4. Irrevocability

It is the intention of the Donor that this instrument shall constitute an irrevocable gift in Trust of all property at any time held under this agreement.

Article 5. Principal and Income

All questions relating to the ascertainment of income and principal and the allocation of receipts and disbursements between income and principal shall be resolved by the Trustee in accordance with the terms of the Uniform Principal and Income Act from time to time in effect in .

Article 6. Payments to Minor or Incompetent

A. If any person to whom any payment or distribution from any Trust created by this instrument is required or permitted by any provision of this instrument to be made is then a minor, incompetent, or incapable of receiving such payment or distribution, the Trustee may, but need not, from time to time exercise any one or more of the following powers:

1. Transfer property to the name of the person.

2. Transfer property to any custodian or guardian of the property of the person without bond.

3. Transfer property to the Trustee of any Trust empowered to receive and hold the property and to distribute it to that person as soon as the person is capable of receiving it without substantial risk of involuntary diversion.

4. Transfer property to any creditor of the person in discharge of any debts of the person.

5. Use such payment or distribution to obtain goods or services for the person.

Article 7. Powers of Trustee

The Trustee shall have the powers granted below in addition to the powers granted by applicable law.

A. To change the situs of the Trust to any place in the United States of America or any other country.

B. Not to file an inventory of the property which is part of the Trust nor annual accounts of administration where such filing is not required.

C. To retain for any period of time any property which may be received or acquired.

D. To collect, receive, and receipt for rents, profits, or other income from any property which may be held.

E. To expend money or other property in order to collect, sell, manage, conserve, or administer any property which may be held.

F. To sell, lease, exchange, grant options on, release, demolish, abandon, dedicate, and otherwise dispose of any property which may be held.

G. To transfer title to, grant rights in, and convey in fee simple or otherwise any property which may be held.

H. To invest and reinvest in any and all kinds of securities, domestic or foreign, and other investment media.

I. Not to diversify the property which may be held.

J. To withhold an amount from Trust income in the discretion of the Trustee to provide for depreciation or depletion.

K. To retain cash for reasonable periods of time in amounts sufficient to meet anticipated needs.

L. To do all things necessary, customary, or desirable to conduct the affairs of an unincorporated business, mining or farming operation, real estate operation, or other venture.

M. To do all things necessary, customary, or desirable to conduct the affairs of any corporation.

N. To organize, reorganize, merge, consolidate, recapitalize, dissolve, liquidate, or otherwise create or change the form of any entity.

O. To exercise all voting, sale, purchase, exchange, or other rights or options with respect to any security or other property which may be held.

P. To refuse, reject, or not to exercise any offer to purchase, option to purchase, voting, or other right or option with respect to any security or other property which may be held.

Q. To participate in any plan or proceeding for protecting or enforcing any right, obligation, or interest arising from any property which may be held.

R. To expend money or other property in order to protect any property which may be held.

S. To pay, contest, compromise, abandon, release, adjust, submit to arbitration, sue on, defend, and otherwise deal with and settle any claim in favor of or against the Trust or the Trustee.

T. To receive, acquire, and retain policies of insurance in any amount, against any risk in which the Trust has an insurable interest.

U. To borrow money or other property for such periods of time, on such terms and conditions, and for such purposes as may be deemed appropriate.

V. With respect to any obligation held, to reduce the interest rate on it, to continue it on and after maturity, to foreclose on the security, or to acquire the security without foreclosure.

W. To keep books of account and to make reports on such reasonable basis and with such detail as may be deemed appropriate.

X. To execute any instrument, under seal or otherwise.

Y. To bind absolutely, by any action taken or not taken, all beneficiaries of the Trust as against any other party.

Z. To sell, exchange, purchase, or otherwise deal with any beneficiary of the Trust or with any Trust or estate of which either the Donor, the Donor's spouse or any issue of the Donor is or was a Donor or beneficiary.

AA. To act notwithstanding the self-interest of any Trustee.

BB. To obtain the advice of accountants, attorneys-at-law, brokers, investment counsel, realtors, appraisers, and other experts.

CC. To delegate to one or more agents authority to execute contracts, checks, documents of title, and other instruments, and to perform other ministerial or discretionary functions.

DD. To enter into binding agreements not to exercise any power which they possess on such terms and conditions and for such reasons as may be deemed appropriate.

EE. To enter into any pooling or unitization agreement.

FF. To purchase options on any property.

GG. To advance money on behalf of the Trust for which advances, with any interest, the Trustee shall have a lien on the assets of the Trust as against any beneficiary.

HH. To permit any beneficiary to have the use, possession, and enjoyment of any property then distributable pending actual distribution of the property.

Article 8. Governing Law

The construction, validity, and effect of this agreement and the rights and duties of the beneficiaries and Trustee shall at all times be governed exclusively by the laws of .

Article 9. Limitations on Trustee’s Power

No Trustee or successor Trustee shall have at any time the power to revest title in the Donor, to distribute income to the Donor, or to borrow any part of the principal or income of any Trust or Trust fund.

Article 10. Counterparts

This agreement may be executed in any number of counterparts, any one of which shall constitute the agreement between the parties.

Article 11. Amendments

The Trustee is authorized and empowered in its sole and absolute discretion to amend, change, or supplement this instrument in any manner whatsoever, except as provided below.

Article 12. Construction

A. Unless the context requires otherwise, all words used in the singular number shall extend to and include the plural, and all words used in any gender shall extend to and include all genders.

B. The adoption of a minor who is not an issue of the Donor by a person or persons shall have the same effect except for determining age as if the minor were born to such person or persons on the date of adoption.

C. The terms "brother" and "sister" shall include persons related by half blood as well as whole blood.

D. The term "Trustee" shall include all those holding that office under this agreement from time to time.

E. The term "children" means first generation offspring of the designated ancestor; the term "issue" means both children and lineal descendants indefinitely.

Article 13. Trustee

A. , a banking corporation organized and existing under the laws of the United States with its principal office located at , is appointed initial Trustee under this agreement.

B. If, for any reason, the Trustee shall cease to be a Trustee, then such person as shall have been designated by written instrument signed by the former Trustee shall be appointed as a successor Trustee. If no such successor Trustee shall have been designated within days of the vacancy, then shall act as a successor Trustee to the Trust.

C. No Trustee to whom a payment or distribution of property, income, or corpus may be made or withheld shall be permitted or required to vote on or participate in any action taken on the same.

D. There shall be at all times, as to each of the Trusts created by this instrument, at least one independent Trustee.

E. All discretionary powers and duties vested in any Trustee under this agreement which is not a natural person may be exercised on its behalf by its governing board, committee, or principal officers.

F. No bond or other security shall ever be required to be given or filed by any Trustee under this agreement for the faithful execution of its duty.

G. No Trustee under this agreement shall be liable except for willful malfeasance or bad faith.

Execution

IN WITNESS WHEREOF, on this the day of , 20 , Grantor and Trustee have signed this Instrument.

By:

Attach Schedule A

Acknowledgment

State of County of

Personally appeared before me, the undersigned authority in and for the said county and state, on this , within my jurisdiction, the within named , who acknowledged that he is of , a corporation.

NOTARY PUBLIC

My Commission Expires:

State of County of

Personally appeared before me, the undersigned authority in and for the said County and State, on this , within my jurisdiction, the within-named , who acknowledged that he executed the above and foregoing instrument.

NOTARY PUBLIC

My Commission Expires:

State of County of

Personally appeared before me, the undersigned authority in and for the said County and State, on this , within my jurisdiction, the within-named , who acknowledged that he executed the above and foregoing instrument.

NOTARY PUBLIC

My Commission Expires:

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What a QTIP Trust Is and When It’s Used

A Qualified Terminable Interest Property (QTIP) trust is an estate planning vehicle that provides lifetime income to a surviving spouse while preserving control over the remainder for other beneficiaries. It qualifies for the federal marital deduction when structured to pay all income to the spouse for life, with the trustee empowered to manage principal per the trust terms. QTIP provisions are commonly used to protect children from a prior marriage, control final distribution, and defer federal estate tax on the property passed to the surviving spouse until that spouse’s death.

Why a QTIP Trust Matters for Estate Planning

A QTIP trust combines income support for a surviving spouse with the grantor’s ability to control who ultimately receives the trust remainder, preserve the marital deduction for estate tax purposes, and manage complex family dynamics without immediate transfer of principal.

Why a QTIP Trust Matters for Estate Planning

Core Elements of an Effective QTIP Trust

A professional QTIP trust clearly defines parties, powers, distributions, tax treatment, administration rules, and funding instructions to ensure the marital deduction applies and trustee actions match grantor intent.

Grantor

Identifies the person creating the trust and states their authority, intent, and any reserved powers to modify or revoke the trust where allowed.

Trustee

Names the trustee with explicit management powers, successor trustee rules, fiduciary duties, and any special powers to allocate income or invade principal.

Income Beneficiary

Specifies the surviving spouse as income beneficiary, describes income payment frequency, and clarifies what counts as income for distributions.

Remainder Beneficiaries

Lists who receives the trust corpus after the spouse’s death, including contingent remaindermen and mechanisms for substitution or disclaimers.

Tax Language

Includes QTIP-specific marital deduction clauses and trustee election procedures needed for estate tax treatment and timely Form 706 reporting.

Funding Instructions

Describes assets to fund the trust, funding timeline, titling steps, and instructions for funding upon death or by inter vivos transfer.

Essential Information to Include

Grantor Name: Full legal name
Trust Name/Date: Formal trust title and execution date
Trustee Details: Name, contact, and successor
Income Beneficiary: Surviving spouse full name
Remainder Beneficiaries: Names and relationship
Asset List: Description of funded property

Who Typically Uses a QTIP Trust

Practitioners and individuals use QTIP trusts when balancing spousal support with long-term distribution control across blended families or when preserving estate tax benefits.

  • Estate planning attorneys guiding marital deduction and distribution clauses
  • Executors and trustees administering income for a surviving spouse
  • Tax advisors preparing Form 706 and advising on estate tax elections

Professionals collaborate—attorneys, trustees, and tax advisors—to ensure compliance with tax rules, funding mechanics, and fiduciary duties.

Step-by-Step: Drafting and Executing a QTIP Trust

Follow a clear sequence to ensure the trust meets QTIP rules, is properly funded, and is administrable by the trustee.

  • 01
    Draft Terms: Define income, remainder, and trustee powers in writing.
  • 02
    Review Tax Language: Include marital deduction clauses and Form 706 election process.
  • 03
    Fund the Trust: Retitle accounts and transfer assets per funding schedule.
  • 04
    Execute Formalities: Sign with required witnesses/notary as applicable.

Typical Workflow for Preparing and Submitting a QTIP Trust

A standard preparation-to-execution workflow improves accuracy and records continuity during trustee handoff and any required filings.

  • Prepare Documents: Attorney drafts trust and funding schedules.
  • Place Signature Fields: Designate signature and date locations for each party.
  • Complete Signatures: Grantor and trustees sign with witnesses or notary if required.
  • Store Records: Provide copies to trustee, beneficiaries, and estate counsel.

Setting Up an Online QTIP Trust Signing Workflow

Configure authentication, field behavior, and notifications to match legal requirements and the signers’ capabilities.

Field Configuration
Authentication Strength Email link, SMS code, or KBA per sensitivity
Signature Order Sequential or parallel signer order
Conditional Fields Show funding clauses after funding checkbox
Notifications Email confirmations and executed copies to parties

Technical Considerations for Electronic Signing and Storage

Choose a platform that supports secure storage, robust audit trails, and the file formats you use for trust documents.

  • File Formats: PDF and DOCX are standard
  • Integrations: Support for cloud storage and practice management
  • Authentication: Email, SMS, or stronger options

Timing and Key Deadlines to Track

While QTIP trusts themselves have no single filing deadline, related estate and administration deadlines require planning and timely action.

Execution Timing:

Execute prior to incapacity to avoid probate complications

Funding Deadline:

Fund inter vivos trust promptly to effectuate terms

Form 706 Filing:

Estate tax return due nine months after death (IRS)

Probate Administration:

Typical timeline 6–12 months depending on estate complexity

Election Window:

Executor must make QTIP election on Form 706 timely

Common Mistakes When Preparing a QTIP Trust

  • Failing to fund the trust, which nullifies intended transfers and tax treatment
  • Using vague beneficiary descriptions that create interpretation disputes at administration
  • Omitting QTIP election language required for marital deduction eligibility
  • Neglecting successor trustee arrangements leading to administration delays

Risks and Potential Consequences of Errors

Estate Tax Exposure: Loss of marital deduction
Fiduciary Liability: Breach claims and removal risk
Form 706 Penalty: Late or incorrect filing penalties
Probate Delay: Administration time and costs increase
Beneficiary Disputes: Litigation and settlement costs
Funding Failure: Assets pass outside intended trust

eSignature Pricing and Feature Comparison Relevant to QTIP Workflows

Compare typical vendor starting prices and capabilities for signing, bulk distribution, audit trails, and HIPAA support when evaluating eSignature tools for trust document workflows.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies Varies Varies Varies
Bulk Send Yes Yes Yes Yes Varies
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No
Envelope Cap No cap 100 envelopes/user/year Varies Varies Varies

Frequently Asked Questions About QTIP Trusts

Answers to common practical and legal questions encountered when drafting, executing, or administering a QTIP trust.


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