Creating an estate plan for a blended family requires careful planning and consideration. If you have children from a previous relationship, you must create a plan that will both provide for your current spouse and retain assets for your children once your current spouse dies. One estate planning tool that is tailor made for just this purpose if the Qualified Terminable Interest in Property, or QTIP, trust. Talk to your estate planning attorney to decide if a QTIP trust is right for your estate plan. In the meantime, consider some of the following information about a QTIP trust.
- A QTIP trust operates in the same basic fashion as any other trust. You must appoint a trustee, designate a beneficiary and fund the trust with assets
- Assets used to fund a QTIP trust should be sufficient to provide regular income in the event of your death
- If you predecease your spouse, the income derived from the QTIP trust will go directly to your spouse for his or her maintenance until death.
- Your spouse cannot touch any of the principal used to fund the trust unless the terms of your QTIP trust specifically allow it
- When your spouse dies, the principal assets that were used to fund the trust will then pass directly to your children
- By using a QTIP trust, you can provide for your spouse without putting any of the assets that were ultimately intended for your children at risk.