The QTIP trust may be a useful substitute, in some cases, for the marital trust (or "A" trust) in the traditional two-trust marital deduction plan. The decedent's share could be divided between the QTIP (A) trust and the credit (B) trust. This would ensure that the decedent's share will ultimately pass to his or her children, but will meanwhile be available to the surviving spouse for life, with no taxes at the first death.

In addition, qualifying terminable interest properties make possible the use of the three-trust estate plan, with a marital deduction trust, a credit trust, plus a QTIP trust. Here the QTIP trust has the advantage of providing the surviving spouse with income during lifetime without giving the power to dispose of all of the property. In short, the QTIP trust assures that the remainder beneficiaries of the trust will receive the property after the death of the spouse. The disadvantage is that the property is included in the surviving spouse's estate, even though the surviving spouse only enjoys a life interest in the property. Click here for an illustration comparing the QTIP trust and the Credit trust.

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