C trust (marital QTIP)
In an A-B-C plan, holds the marital share above the bypass amount. Spouse gets income for life; first decedent controls who receives remainder (e.g., children from prior marriage). Requires a QTIP election on Form 706.
| Facet | Detail |
|---|---|
| Also called | C trust, marital QTIP trust, QTIP residue trust |
| A-B / A-B-C role | C in A-B-C (marital share after B is funded) |
| When created | At first spouse's death |
| Revocable | No |
| Inter vivos / testamentary | Testamentary sub-trust |
| Typical beneficiaries | Surviving spouse (income for life); remainder per first decedent's terms |
| Primary purpose | Marital deduction for excess over bypass + control remainder beneficiaries |
| Marital deduction | Yes — with QTIP election on Form 706 |
| Uses estate exclusion | No — uses marital deduction instead |
| In survivor's estate | Yes — QTIP included at second death (with second step-up on those assets) |
| Basis step-up | At first death; second step-up at survivor's death on QTIP assets |
| Income tax | Trust 1041; income typically taxed to spouse if distributed |
| Crummey powers | No |
| GST / dynasty | Remainder may pass to GST trust if planned |
| Spendthrift | Moderate — spouse income rights; remainder protected |
| See-through (IRA) | Poor choice as IRA beneficiary |
| Key tradeoff | Spousal support + remainder control vs full inclusion at second death |