Estate Planning In Massachusetts: What Is A Qualified Terminable Interest Property (QTIP)?
Are you married? If you have significant assets, an estate planning tool called a qualified terminable interest property or “QTIP” may be the right option for you to protect your assets and your beneficiaries. A QTIP can be especially useful if you have or your spouse has children from a previous relationship. Here, our Norwood estate planning attorney highlights the most important things to know about a qualified terminable interest property (QTIP) in Massachusetts.
Qualified Terminable Interest Property: Defined
The Legal Information Institute defines a qualified terminable interest property (QTIP) as “an estate planning tool used to maximize a couple’s applicable exclusion amounts while qualifying for the marital deduction.” In other words, a QTIP is a tool that can be used as part of an estate planning strategy that allows people to allocate parts of their estate to benefit their spouse upon death, while still maintaining control over how the estate is ultimately distributed.
What is the Marital Deduction and Why Does It Matter for Estate Planning
The marital deduction is a key part of the value of a QTIP. The marital deduction is a key provision in the American tax code that allows an unlimited transfer of assets between spouses at any time, including upon death. There are no transfer tax, estate taxes, or gift taxes. The deduction is significant because it helps minimize the tax burden during the transfer of estate assets. For high asset people, leveraging the marital deduction can preserve wealth. A QTIP allows a person to use the marital deduction―tax free transfer of assets to their spouse upon their death—without losing control over what will ultimately happen to those assets.
Two Key Reasons Why a QTIP May Be the Right Option for Your Estate Plan
Are you considering using a QTIP as part of your estate plan in Massachusetts. It may or may not be the right option. Here are two of the primary advantages:
- Grantor Retains Control Over Assets: One of the primary reasons to consider incorporating a QTIP into your estate plan is the level of control it offers the Unlike other estate planning tools, a QTIP allows the original owner of the assets to specify how the assets are managed and eventually distributed after the death of the surviving spouse. This is particularly important in blended families or situations where there are specific desires about the disposition of the estate to children from previous marriages or other heirs.
- QTIP Offers Significant Tax Advantages to Some: For estates facing potential tax liabilities, a QTIP can offer significant advantages. By qualifying for the marital deduction, the QTIP allows the estate to defer the payment of estate taxes until the death of the second This not only preserves more wealth for the surviving spouse’s use during their lifetime but also provides a period during which the estate can potentially grow in value.
Contact Our Massachusetts Estate Planning Lawyer for Guidance and Support
At Fisher Law LLC, our Massachusetts estate planning attorneys are experienced advocates for clients. If you have any questions about QTIPs and how they are used to minimize estate taxes for married couples, we are more than ready to help. Contact our estate planning firm for an initial consultation. Our firm provides estate planning services in Westwood, Norwood, Dedham, Walpole, Stoughton, Foxborough, Canton, and other communities of Norfolk County, and throughout the Greater Boston area.
