Qualified Terminable Interest Property (QTIP) Trust Template

This Trust Agreement is made on [Date] by [Grantor Name] ("Grantor") and [Trustee Name] ("Trustee") for the benefit of [Spouse Name] ("Spouse") and remainder beneficiaries.

Article I – Funding and Purpose

• Grantor transfers property listed in Schedule A to Trustee to be held as a QTIP marital trust qualifying for IRC § 2056(b)(7) election.
• Purpose: provide Spouse with lifetime income while preserving remainder for designated beneficiaries.

Article II – Income Distribution

• Trustee shall pay or distribute all net income to Spouse at least annually for life.
• Spouse has the right to require Trustee to make unproductive property income-producing within a reasonable time.

Article III – Principal Distributions

• Trustee may distribute principal to Spouse for health, education, maintenance, and support (HEMS) at Trustee’s discretion, taking into account Spouse’s other resources.
• Optional: grant Spouse a limited power to appoint principal among descendants during life or by will (if consistent with estate plan).

Article IV – QTIP Requirements

• No person other than Spouse may receive income or principal during Spouse’s lifetime.
• Trustee shall not make distributions that would disqualify trust from QTIP election.

Article V – Remainder Beneficiaries

• Upon Spouse’s death, trust principal (as adjusted for taxes) shall be distributed to [Children/Descendants/Charity] per stirpes or to trusts described in Schedule B.
• Provide for GST exemption allocation or creation of GST exempt/non-exempt shares.

Article VI – Trustee Powers

• Manage investments, retain assets, allocate income/principal, borrow, lend, sell, lease.
• Power to adjust and convert to unitrust (if permitted by state law) to satisfy income requirements.

Article VII – Taxes and Elections

• Trustee shall cooperate with executor of Grantor’s estate to make QTIP election on federal and state estate tax returns.
• Taxes attributable to trust property payable from trust principal unless otherwise directed.

Article VIII – Trustee Succession

• Procedure for resignation, removal, and appointment of successor trustees.
• Eligibility requirements (independent trustee if principal invasion standard broad).

Article IX – Spendthrift Provision

• Beneficiaries’ interests protected from creditor claims and assignment.

Article X – Governing Law

• Trust governed by laws of [State]; situs may be moved by Trustee with consent of beneficiaries/court.

Article XI – Miscellaneous

• Trust accounting, notices, merger, severability, dispute resolution.
• Inclusion of trust protector or advisory committee provisions if desired.

Article XII – Signatures

Grantor: ____ Date: __

Trustee: ____ Date: __

Schedules

• Schedule A: Trust funding assets.
• Schedule B: Remainder trust provisions or beneficiary distribution instructions.

Coordinate with estate planning attorney to ensure tax elections, portability, and GST planning are properly addressed.