QTIP Trust for Second Marriage — Protecting Kids From First Marriage

I'm 58, remarried 4 years ago. I have 2 kids from my first marriage (ages 24 and 27) and my current wife has 1 kid (age 15). My estate is about $5M — mostly retirement accounts and a house in Massachusetts.

I love my wife but I need to make sure my kids from the first marriage get the bulk of the estate. If I leave everything outright to my wife, she could remarry after I die and everything could end up going to her new husband's family. My kids get nothing.

My attorney mentioned a QTIP trust but I don't fully understand how it works. Can someone explain in plain English?

A QTIP trust is exactly the right tool for your situation. Here's how it works in plain English:

1. You set up the QTIP trust in your estate plan (usually in your revocable trust or will)
2. When you die, assets go into the QTIP trust
3. Your wife gets all the income from the trust for life (interest, dividends, etc.)
4. The trustee can also distribute principal for her "health, education, maintenance, and support" if the trust terms allow
5. When your wife eventually dies, whatever's left in the trust goes to YOUR kids — not hers, not her new husband, not anyone else

Your wife cannot change the beneficiaries. She cannot withdraw all the principal. She cannot leave the trust assets to anyone else in her will. That's the whole point.

The estate tax benefit: QTIP assets qualify for the marital deduction, so no estate tax is owed when you die. The trust is included in your wife's estate when she dies — but her estate can use your remaining exemption (portability) plus her own.

We set up a QTIP for my husband 3 years ago — very similar situation. Two things I'd add:

• Pick the trustee carefully. If your wife is the trustee, she controls distributions to herself. Some attorneys recommend an independent co-trustee (bank trust department or family friend) to avoid conflicts.
• Be specific about principal distributions. "Health, education, maintenance, and support" (HEMS) is the standard but it's subjective. Does "maintenance" mean your wife keeps the same lifestyle? Can she buy a new car from the trust? Spell it out.

The trustee question is important. I don't want to insult my wife by appointing a bank as trustee, but I also don't want her to feel restricted. What's the standard approach?

Also — my attorney said Massachusetts has its own QTIP rules that are different from federal. Something about an "independent QTIP election"? Can anyone explain?

On the trustee question: a common approach is to make your wife the trustee for income distributions and an independent party as co-trustee for principal distributions. This gives her control over day-to-day income while protecting the kids' inheritance from large principal withdrawals.

On the Massachusetts QTIP: this is a big deal. Massachusetts allows an "independent QTIP election" on the state estate tax return, separate from the federal return. Here's why it matters:

MA has a $1M exemption. Federal is $13.99M. If you die with $5M, the standard QTIP election defers ALL estate tax. But what if you want to use the MA exemption now (sheltering $1M in a credit shelter trust) while using the QTIP for the rest?

The independent QTIP lets you make different elections at the state and federal level. You can QTIP-elect a portion for MA purposes while not electing it federally, or vice versa. It's complicated but extremely useful for MA residents with estates in the $1-14M range.

The Massachusetts estate tax guide explains the independent QTIP election and how it interacts with the credit shelter trust.

One warning from experience: make sure you coordinate the QTIP with any prenuptial or postnuptial agreement. If your prenup says your wife waives her right to your estate, but your estate plan includes a QTIP for her, there's a conflict. Also check your state's elective share laws — in some states, the surviving spouse can claim a share of the estate regardless of what the will says. Massachusetts gives the surviving spouse a right to elect a statutory share.

I'm on the other side of this. My dad remarried and did NOT set up a QTIP. He left everything to his new wife "trusting" she'd pass it to us. She's now 82, has a new boyfriend, and just changed her will to leave everything to her church. My brother and I are getting nothing from our father's $3M estate.

PLEASE set up the QTIP. Don't rely on "trust" and good intentions. Once it's your wife's money outright, your kids have zero legal claim to it.

That story hits hard. This is exactly what I'm trying to prevent. Moving forward with the QTIP.

Follow-up: my wife is agreeable to the QTIP (we had a frank conversation). She actually feels better knowing there's a structure in place rather than relying on informal promises. Turns out the fear of bringing it up was worse than the actual conversation.

That's actually the ideal outcome. The QTIP protects your kids AND protects your wife from pressure by future partners or family members to change her estate plan. I tell clients: "The QTIP protects everyone, including the surviving spouse."

One more thing for your MA-specific situation: coordinate the QTIP with a credit shelter trust (also called a bypass trust or B trust). The optimal structure for a $5M MA estate is typically: $1M into the credit shelter trust (uses the MA exemption), remaining $4M into the QTIP (deferred via marital deduction). This minimizes MA estate tax at both deaths.

Update: Estate plan is done. Revocable trust with: (1) credit shelter trust funded with $1M (MA exemption), (2) QTIP trust for the remainder, (3) wife as income beneficiary of QTIP with independent co-trustee (wife's brother, who gets along with my kids), (4) my 2 kids as remainder beneficiaries of both trusts. Total cost: $6,500. Peace of mind: priceless. Thanks everyone.