Marriage can make some issues more complicated. This can be even truer for financial issues such as estate planning. However, remarrying can make estate planning even more complicated, especially if there are children from a first marriage that a parent wants to protect in the event of his or her death. Luckily, there are special types of trusts which are especially designed for people in Florida who are on their second or third marriage.
These special types of trusts are called QTIP trusts, which stand for qualified terminable interest property trust. This estate planning instrument is designed to allow a person to leave a large portion of an estate to someone other than his or her spouse. One of the most common uses of a QTIP trust is to leave assets and property to children from a previous marriage. Another purpose of the trust is to benefit from the unlimited marital deduction afforded in current estate tax law.
According to current tax law, the surviving spouse will receive all income from the trust annually, which provides a lifetime of income for the spouse. The children of the trust maker will eventually receive the assets assigned to the QTIP trust. Also, putting assets in a trust, rather than simply leaving assets to a surviving spouse, can help protect them from creditors.
The tax benefits of QTIP trusts come into play because estate taxes are deferred if the surviving spouse is not the final beneficiary of most of the deceased spouse’s assets. The estate tax will not be due until the death of the surviving spouse. On the other hand, without the trust, the final beneficiaries would have to pay estate taxes as soon as their benefactor dies. These rules apply to Florida as well as other states.