Which of the following is NOT a requirement of a QTIP trust?

• A. All net accounting income to be paid to the surviving spouse at least annually.
• B. Principal to be distributed at the trustee's discretion for the surviving spouse's health, education, support, or maintenance.
• C. The surviving spouse has the ability to require the trustee to convert non-income producing assets to income producing assets.
• D. The surviving spouse may be the only permissible distributee during their lifetime.

Answer: (B)

A QTIP trust is defined by its treatment of income for the surviving spouse. The crucial feature is that all net income from the trust must be paid to the surviving spouse for life, at least on an annual basis, so that the surviving spouse has a lifetime income interest. Additionally, during the surviving spouse’s lifetime, the trust generally restricts other beneficiaries from receiving distributions, ensuring the income is directed to the spouse. Principal distributions are a flexible tool the trustee may use to meet the spouse’s needs, but they are not a required element of a QTIP structure. This is why the statement describing principal distributions as a condition is not a required feature of a QTIP. The main point to remember is that the defining requirement is the income payout to the surviving spouse for life, with discretionary principal distributions being optional rather than mandatory.