The marital deduction can be taken advantage of by transferring the property outright to a spouse. Generally, an interest transferred in a trust where the spouse is a beneficiary will not qualify for the marital deduction unless it is a "QTIP" trust. A QTIP trust is a trust where the spouse's interest constitutes qualified terminable interest property. The requirements for a QTIP trust are that:
(1) The property must pass from the decedent;
(2) The surviving spouse must be entitled to an income interest for life;
(3) No other beneficiary may have any rights in the trust during the surviving spouse's life; and
(4) An irrevocable election must be made to treat the trust as a QTIP trust.
The advantage of the use of a QTIP trust is that it allows the decedent to provide for a surviving spouse but also specify where the property goes upon the death of the surviving spouse. If the property is given outright to the surviving spouse, the surviving spouse may then dispose of the property as they like and there is no assurance that the property will pass to the decedent's children, for example, upon the death of the surviving spouse.