Reverse QTIP Election in Texas

Reverse QTIP Elections: Using Both Spouses’ GST Exemptions

Families who want to leave wealth to grandchildren, or in long-term trusts that skip estate tax for generations, need to plan for the generation-skipping transfer (GST) tax as well as the estate tax. A common gap: when a deceased spouse’s property goes into a QTIP marital trust, the first spouse’s GST exemption can go unused. The reverse QTIP election closes that gap.

Reviewed by Turner Henington, attorney and former KPMG tax accountant, Texas Bar No. 24148206 · Updated November 2026

Why the Reverse QTIP Election Exists

The GST tax applies, at the top estate tax rate, to transfers that skip a generation, such as gifts or trusts for grandchildren, beyond each person’s GST exemption. In 2026 the GST exemption is $15 million per person, the same as the estate tax exemption (26 U.S.C. § 2631; IRS).

When the executor makes a QTIP election, the QTIP property is taxed in the surviving spouse’s estate, and the survivor normally becomes its “transferor” for GST purposes. Without more, the first spouse’s GST exemption has nothing to attach to and can be lost, because portability does not carry over GST exemption. The reverse QTIP election, under 26 U.S.C. § 2652(a)(3), keeps the first spouse as the transferor so their GST exemption can be allocated to the trust.

How It Works

1. The plan creates a QTIP trust at the first death. See QTIP trusts.
2. The trust is divided into a GST-exempt share and a non-exempt share, because the reverse QTIP election must apply to the whole trust it covers. Dividing first lets the election apply only to the share that will receive GST exemption.
3. The executor makes both elections on Form 706: the QTIP election for the marital deduction and the reverse QTIP election for the exempt share, and allocates the first spouse’s GST exemption to that share.
4. At the survivor’s death, the QTIP property is included in the survivor’s estate for estate tax, but the exempt share can pass to grandchildren or dynasty trusts without GST tax.

Who Needs a Reverse QTIP Election?

• Couples whose plans leave property in long-term trusts for children and grandchildren
• Couples using grandparent and bloodline planning or lifetime inheritance trusts
• Estates large enough that the first spouse’s GST exemption would otherwise be wasted

Texas allows trusts created on or after September 1, 2021 to last up to 300 years (Tex. Prop. Code § 112.036), which makes GST planning especially valuable here.

Alternatives

• A bypass trust funded at the first death can receive the first spouse’s GST exemption directly, without a QTIP election.
• Lifetime gifts to a dynasty trust can use GST exemption during life. See lifetime gifting.

How We Help

We draft wills and trusts that allow QTIP trusts to be divided into exempt and non-exempt shares, and after a death we work with the executor and CPA on Form 706, Schedule R, to make the elections and GST allocations.

Why Work With Us

• Tax background. Turner Henington is a former KPMG tax accountant, so we design trusts with both the estate tax and your family’s income tax in mind.
• We work with your CPA and advisor. Marital and bypass trust decisions often happen after a death, on the estate tax return, so we coordinate with the people who prepare it.
• Flat-fee quotes. After a free consultation, you get a written flat-fee quote before any work starts.
• We also handle the first death. Funding these trusts and making the elections is part of settling the estate, and we handle both the planning and the administration.

Talk to an Estate Tax Planning Attorney

Call (512) 737-8404, book a free consultation, or send us a message below.

What Our Clients Say

Reverse QTIP Election FAQ

What is a reverse QTIP election?

An election under 26 U.S.C. § 2652(a)(3) that treats the first spouse to die as the transferor of a QTIP trust for generation-skipping transfer tax purposes, so the first spouse’s GST exemption can be allocated to it.

Why not just rely on portability?

Portability lets a surviving spouse use the deceased spouse’s unused estate tax exemption, but it does not carry over the GST exemption. A reverse QTIP election or a bypass trust is needed to use the first spouse’s GST exemption.

Can the reverse QTIP election cover part of a trust?

No. It applies to the entire trust it covers, which is why plans usually divide the QTIP trust into exempt and non-exempt shares before the election.

Where is the reverse QTIP election made?

On the deceased spouse’s federal estate tax return, Form 706, along with the allocation of GST exemption.

What is the GST exemption in 2026?

$15 million per person, the same as the estate tax exemption.

Other Estate Tax Planning Tools

• Estate tax planning in Austin: overview
• Bypass (credit shelter) trust
• Marital trust
• QTIP trust
• Portability: keeping a deceased spouse’s unused exemption
• The Texas community property double step-up
• Lifetime gifting in Texas

Sources

• 26 U.S.C. § 2652(a)(3) (reverse QTIP election)
• 26 U.S.C. § 2631 (GST exemption)
• 26 U.S.C. § 2056(b)(7) (QTIP)
• IRS: About Form 706
• IRS: What’s new, estate and gift tax
• Tex. Prop. Code § 112.036 (300-year trusts)

This page is general information, not tax or legal advice for your situation. Reading it does not create an attorney-client relationship.