The third-line feature of the Marital Universal Trust is the “stand-by” Qualified Terminable Interest Property (QTIP) Trust. The QTIP Trust (Trust “C”) allows any value of the decedent spouse’s estate that may exceed the federal exemption equivalent amount (i.e., to exceed the maximum value that can be funded to Trust “B”) to qualify for the marital deduction – without the decedent spouse losing control of his/her portion of the trust estate.

In addition to the control benefit, a portion (or all) of the QTIP Trust may be sheltered under the surviving spouse’s unified credit if the surviving spouse’s estate was less than the federal exemption equivalent amount at the time of his/her death.

When the surviving spouse dies, the QTIP portion of the trust estate, as well as the Trust “B” portion, can be distributed only to the heirs of the first spouse to die, regardless of whether or not his/her heirs are the same as the heirs of the last spouse to die.