QTIP Trust: Definition and How It Works in California

By Eric Ridley, attorney, Ridley Law. Updated September 2026.

A QTIP trust (qualified terminable interest property trust) pays all of its income to a surviving spouse for life, qualifies for the federal estate tax marital deduction, and then passes what is left to the beneficiaries the first spouse chose, often children from an earlier marriage.

How it works in California

Ridley Law’s guide to QTIP trust administration after the first spouse dies covers the trustee’s ongoing duties. QTIP treatment comes from federal, not state, law: once the executor makes the election on the estate tax return, the property is treated as passing to the surviving spouse for estate tax purposes, and that election cannot be undone (26 U.S.C. § 2056(b)(7)).

To qualify, the surviving spouse must receive all trust income at least annually for life, and no one, including the surviving spouse, can direct trust principal to anyone but the spouse while the spouse is alive. When the surviving spouse dies, the trust pays or holds what is left for the beneficiaries the first spouse named, not whoever the survivor might later prefer.

Why it matters

A QTIP trust lets a spouse in a blended family provide for the survivor for life while still guaranteeing that the first spouse’s own children eventually inherit. For example, in a second marriage where each spouse has children from an earlier relationship, the first spouse to die can support the survivor without disinheriting their own kids down the line.

Common mistakes

Families sometimes assume a QTIP trust lets the surviving spouse redirect principal to new beneficiaries; it does not, by design. Missing the deadline to make the election on the estate tax return is another costly mistake, since the election is irrevocable once made and a missed or botched election is hard to repair later.

Related terms

• Irrevocable Trust: a QTIP trust becomes one of these once it is funded after the first spouse’s death.
• Community Property: typically only the deceased spouse’s separate or community half funds a QTIP trust.
• Step-Up in Basis: QTIP assets get a basis adjustment again when the surviving spouse later dies.
• Bypass Trust (AB Trust): the B trust in an AB plan, which keeps the first spouse’s share out of the survivor’s taxable estate.
• Marital Deduction: the federal rule that lets a spouse receive unlimited transfers without estate or gift tax.
• Survivor's Trust: the share of a married couple’s trust that belongs to the surviving spouse.

Part of the California estate planning glossary. For the full treatment, see QTIP Trust Administration After the First Spouse Dies (CA).