When creating an estate plan, New Jersey couples have a wide range of options. For those who are seeking maximum asset protection, establishing a trust is one of the best possible choices. In particular, a QTIP trust offers a high level of protection, as well as a degree of flexibility.
QTIP stands for Qualified Terminable Interest Property. This type of trust allows a married couple to structure the transfer of assets upon the death of the first spouse. A QTIP trust will allow the surviving spouse to take advantage of the marital deduction, and also gives the surviving spouse the ability to control the distribution of assets. Additionally, all assets included in the trust would be protected from the creditors of the surviving spouse.
When a QTIP trust is created, a personal representative is named. That individual can then choose to make use of either the portability election or a partial QTIP election. This allows the personal representative to ensure that the first spouse’s exclusion amount is put to use and not wasted. From that point forward, the personal representative has a great deal of flexibility in how to use or distribute the assets held in the QTIP trust.
When creating an estate plan, New Jersey residents should understand the pros and cons of various asset protection strategies. For many, a QTIP trust provides an excellent path toward retaining assets while protecting against the claims of outside creditors. However, this is just one of many estate planning tools available, and each family will have its own unique goals and needs within the estate planning process.
Source: Forbes, “Estate Plan Recommendations for Married Couples After ATRA“, Lewis Saret, May 20, 2014