Which statement best describes control under a QTIP arrangement?

Which statement best describes control under a QTIP arrangement?

• A. The surviving spouse controls all principal and income outright.
• B. The decedent can determine ultimate disposition of trust property after death.
• C. The trust is never eligible for estate tax marital deduction.
• D. The dispositive power rests with a non-spouse trustee.

Answer: (B)

In a QTIP arrangement, the decedent places property in a trust for the benefit of the surviving spouse, providing for the spouse to receive all income (and possibly some principal) for life, while preserving the ability to determine what happens to the trust property after the spouse dies. The important control is that the decedent can set the ultimate disposition of the trust assets after the surviving spouse’s death, naming who will receive the remaining trust property. This structure lets the first spouse qualify the trust for the estate tax marital deduction while still directing the ultimate heirs. The other statements misstate how control and ownership work: the surviving spouse does not automatically own all principal outright, the trust can qualify for the marital deduction, and the dispositive power after the spouse’s death is not restricted to a non-spouse trustee unless the trust terms specify such.

In a QTIP arrangement, the decedent places property in a trust for the benefit of the surviving spouse, providing for the spouse to receive all income (and possibly some principal) for life, while preserving the ability to determine what happens to the trust property after the spouse dies. The important control is that the decedent can set the ultimate disposition of the trust assets after the surviving spouse’s death, naming who will receive the remaining trust property. This structure lets the first spouse qualify the trust for the estate tax marital deduction while still directing the ultimate heirs. The other statements misstate how control and ownership work: the surviving spouse does not automatically own all principal outright, the trust can qualify for the marital deduction, and the dispositive power after the spouse’s death is not restricted to a non-spouse trustee unless the trust terms specify such.