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"Q-Tip" property Sometimes, however, spouses desire to have assurance that, not only will the leftover funds in the "by-pass" or "B" trust pass to the couple's children, but the assets in the "marital deduction" or "A" trust will do so, too. Many people are concerned with the surviving spouse remarrying and the money ending up with the new man or woman! This problem can be treated by use of a special trust, described below. The technical name for trust property with "strings" on it is "qualified terminal interest property." The initials from this phrase have generated the peculiar term, "Q-tip" property. When property passing to a spouse is "Q-tip'ed," this means that strings are placed on the ability of the surviving spouse to control who gets the money left in the trust at his or her passing. In this regard, the trustee of a marital deduction or "A" trust would be typically charged with providing for the liberal care, comfort, maintenance, and support of the surviving spouse, but the spouse would not have direct control of the principal. The spouse would get all income from the trust to use as he or she wishes. In addition, the trustee would be obligated to distribute such additional funds as are necessary to maintain the spouse in the standard of living specified. Stated again: At the death of the surviving spouse, assets will pass to those persons that the first spouse to die originally selected. Usually this is the couple's children. Here is an example of a "Q-tip'ed" "A" Trust, where the husband has designated the couple's children as the ultimate beneficiaries. (The wife cannot change this.) 
The wife then will enjoy $1,500,000 in her own living trust, the income from the $1,000,000 in the "B" trust, as well as the income from the $500,000 in the "A" trust. If she should use up all of this, the principal of both "A" and "B" trusts is available to support her. Thus, where assets are plentiful, the use of a Q-tip provision in the "A" trust should not unduly interfere with the survivor's overall financial independence. It is also possible that the surviving spouse can be empowered to make the designation from among a group of persons. For instance: Sometimes one child needs more support than another. A surviving spouse might be given the right to choose which ones need the most support. Back
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