With the prevalence of blended families, a common concern among spouses is providing for a surviving spouse while still protecting the children from a prior marriage. One solution to this conundrum is the creation of a qualified terminable interest (“QTIP”) trust. A QTIP trust is an estate planning tool that enables the grantor to provide for a surviving spouse while still allowing the grantor to maintain control of how the trust assets are distributed once the surviving spouse dies. Typically, income generated from the QTIP trust (and sometimes the principal) is paid to the surviving spouse to ensure lifelong support. Upon the death of the surviving spouse, the balance of the trust is then paid to the beneficiaries specified by the original grantor.

QTIP trusts also have a tax advantage. The income paid to the surviving spouse from the QTIP trust qualifies for the marital deduction. In other words, estate taxes are not assessed until after the death of the surviving spouse. Although a QTIP trust gives the grantor control over how the assets will be distributed upon the surviving spouse’s death, the surviving spouse determines which assets will fund estate taxes.

In the event the surviving spouse wishes to protect the beneficiaries of the QTIP from paying estate taxes, specific language in the surviving spouse’s will must be used. Unlike most areas of estate planning, when apportioning estate taxes between a QTIP trust and estate, a testator’s intention will have minimal impact if the tax apportionment clause does not comply with New York State and federal statutes, as recently determined by the Monroe County Surrogate’s Court. In re Townson, 231 NYS3d 786, 791 (Sur. Ct., Monroe Cnty. 2025) (“[w]here the will or trust lacks the language . . . required by the statutes, the intent of the testator is not the primary issue”).

Where a waiver of apportionment against a QTIP trust is sought, New York Estates, Powers and Trusts Law § 2-1.8(d-1)(1)(A) and Internal Revenue Code § 2207A(a)(1) govern the result. Both statutes require a decedent’s will to include a “specific” direction or indication that estate taxes should not be apportioned among the surviving spouse’s estate and the QTIP trust. The critical determination is the degree of specificity required to constitute an effective waiver. Such was the issue addressed by the Honorable Christopher S. Ciaccio in In re Townson, a matter where Adams Leclair LLP represented the Executor of the Decedent’s estate. In that case, the Court was asked to determine whether an executor may apportion estate taxes across the residuary estate and QTIP trusts when the Will directs taxes to be paid from the residuary estate solely but fails to include specific reference to statutory language authorizing tax apportionment or the QTIP trusts.

A petition was filed by the stepdaughter of the Decedent. The Decedent’s spouse predeceased the Decedent by many years. The spouse’s will established two QTIP trusts for the benefit of his wife (the Decedent) and children (Petitioner and another child) and partially for the benefit of the Decedent’s four biological children from a prior marriage. The Decedent’s Will (which was updated after her spouse’s death) bequeathed her residuary estate to her children. The Will included a general tax apportionment clause providing that all taxes are to be paid from the residuary estate without apportionment. After the Decedent passed, the executor of the Decedent’s estate (her biological son) sought to have the QTIP trusts pay a portion of the $4 million federal and state tax then due, notwithstanding the Will’s language regarding tax apportionment. Petitioner asked the Court to find that the tax apportionment clause in the Decedent’s Will specifically precluded the recovery of any estate taxes from the QTIP trusts and that the language in the Decedent’s Will and facts surrounding the drafting of the Will manifested Decedent’s specific intent to insulate those trusts from any estate tax liability. In opposition, the Executor argued that the Decedent’s Will lacked the specificity required by federal and state law and, as a result, he was not precluded from seeking apportionment from the QTIP trusts and their remainder beneficiaries. The Executor further argued that the Decedent did not intend to grant her husband’s children a tax benefit at the expense of her own children.

Applying relevant state and federal statutes, the Court found that the language used in the Decedent’s Will was insufficient to insulate the QTIP trusts from estate tax liability. The “specific” direction enumerated in the statutes required an express reference to the QTIP trusts or relevant code sections. The tax apportionment clause in the Decedent’s Will did not specifically mention the QTIP trusts and was insufficient to waive apportionment. Consequently, there was no waiver of the estate’s right to recover from the QTIP trusts.

However, the Court did not completely ignore the Decedent’s intent. “To the extent that intent is an issue at all, courts have considered whether directing that the residuary estate pay the entire tax would result in an obvious inequity.” The Court determined that tax exoneration would negatively impact the Decedent’s biological children, the “natural objects of her bounty[,]” which was “something she was not likely to do.” Based on the foregoing, the court ruled that the executor has the authority and right to seek contribution from the QTIP trusts for payment of taxes, as the Will’s language failed to meet the statutory requirements for waiving tax apportionment.

In light of the foregoing, individuals seeking to insulate a QTIP trust from paying its proportional share of estate taxes must include a specific direction in the will itself. Consulting with a qualified estate attorney is certainly an advisable first step.

Mallory K. Smith can be reached at MSmith@adamsleclair.law or through the firm’s website at www.adamsleclair.law