A qualified terminable interest property (QTIP) trust is an estate planning tool that allows the person making the trust (the grantor or settlor) to leave assets for their surviving spouse and direct how the assets remaining in the trust will be distributed to named beneficiaries at the death of the surviving spouse. QTIP trusts are irrevocable (cannot be revoked). At least one trustee (person or entity) must be appointed by the trust to manage the assets of the trust.

A QTIP trust will usually provide regular payments to the surviving spouse—often from the income generated by the assets in the trust. QTIP trusts are often used when the grantor remarries and has children from a previous marriage. If the grantor dies before the grantor’s subsequent spouse dies, the QTIP trust will make income payments to the subsequent spouse and hold the principal assets that were placed in the trust until the surviving spouse dies—at which point the assets will be distributed to the trust beneficiaries.

At the death of the grantor, the executor of the grantor’s estate will file the estate’s tax return and make an election (the QTIP election) of which assets will be placed in the QTIP trust by listing them on a schedule to the estate’s tax return. The assets in a QTIP trust are not subject to estate tax at the grantor’s death but are subject to estate tax at the death of the grantor’s surviving spouse.

In New Hampshire, a Qualified Terminable Interest Property (QTIP) trust is a legal instrument used in estate planning to provide for a surviving spouse while maintaining control over the distribution of the trust assets after the surviving spouse's death. This type of trust is irrevocable, meaning once established, it cannot be revoked or amended by the grantor. The trust is managed by at least one trustee who is responsible for overseeing the assets and ensuring that income payments are made to the surviving spouse, as stipulated by the trust terms. QTIP trusts are particularly useful in situations where the grantor has children from a previous marriage and wishes to ensure that those children will eventually receive the remaining assets. For tax purposes, the assets placed in a QTIP trust are not subject to estate tax upon the grantor's death but will be included in the surviving spouse's estate for estate tax purposes when they pass away. The executor of the grantor's estate must file an estate tax return and make a QTIP election to specify which assets are to be placed in the trust. This election allows the grantor to take advantage of the unlimited marital deduction for estate tax purposes while still retaining control over the ultimate distribution of the assets.