DSUE, Credit Shelter & QTIP Trusts: When to Use Each in a R.I.T.E. Plan

When a married client asks, “what should I do when the first spouse dies?” the practical answer usually isn’t a single trust name — it’s a decision framework. Which vehicle you choose should protect wealth (risk), preserve after-tax investment value (investments), minimize taxes (tax), and memorialize the family’s wishes (estate) — the Wealth Done R.I.T.E. lens. Below is a concise comparison of the Deceased Spousal Unused Exclusion (DSUE)/credit-shelter approach, the so-called “sweetheart” or survivor trust, and the QTIP — when each shine and tradeoffs to weigh.

• DSUE and Portability — DSUE is the unused portion of the first spouse’s federal estate/gift tax exclusion that can be added to the surviving spouse’s exclusion if an estate tax return electing portability is timely filed for the first spouse. Portability is a paperwork election, not a trust. In 2026, each person has a $15M federal estate tax exemption amount and married couples can port the first to die’s unused federal estate tax exemption amount to the surviving spouse.
• Credit-shelter (bypass) trust — a testamentary trust funded at the first death with an amount up to the deceased spouse’s exclusion; assets inside the trust escape inclusion in the surviving spouse’s estate, preserving the deceased’s exclusion for beneficiaries. This trust is contained in your Will.
• Sweetheart/Survivor trust — typically a revocable living joint trust arrangement where the survivor retains broad control (and often full access) to the deceased’s share; administratively simple but it generally does not shelter assets from the survivor’s eventual estate. Remember the surviving spouse can terminate the trust, change terms in the trust, add or delete beneficiaries and can manage the assets as the surviving spouse sees fit.
• QTIP (Qualified Terminable Interest Property) trust — funds provide income to the surviving spouse (qualifying for the marital deduction), while the settlor retains control over the remainder beneficiaries; estate tax on those assets is deferred until the survivor’s death.

The core tradeoffs

Tax sheltering vs. simplicity. A credit-shelter trust shelters appreciation from the survivor’s estate — powerful when assets will grow significantly or state estate tax is a concern. A sweetheart/survivor setup is simple and flexible but puts the deceased’s share back into the survivor’s estate (no shelter). Portability (DSUE) is simple too — but it only protects the exclusion amount and not post-death appreciation; it also requires a timely Form 706 election.

1. Control and family dynamics. QTIP lets the first decedent control ultimate beneficiaries (useful in blended families) while still supporting the spouse; credit-shelter trusts can do that too but with different tax mechanics. Sweetheart trusts favor surviving-spouse control — good when trust between spouses is absolute, less so when blended heirs or creditor protection matter.
2. Portability risks and paperwork. Portability (DSUE) requires filing an estate tax return (Form 706) for the first spouse within the filing period to preserve the DSUE amount. Where filing is missed, the unused exclusion may be lost; where state estate tax applies, portability may not help — and a credit-shelter trust might still be preferable.

How to apply R.I.T.E. in choosing among them

• Risk (R): If creditor protection or protection from poor financial decisions by the survivor is a priority, a credit-shelter or QTIP trust (with spendthrift provisions) wins over a sweetheart/survivor trust.
• Investments (I): If assets expected to appreciate materially (active business, concentrated stock, real estate), keeping those assets out of the survivor’s gross estate (credit-shelter trust) preserves more value for heirs. Portability preserves an exclusion amount but not appreciation.
• Tax (T): For couples with estates comfortably below the combined exclusion, the paperwork simplicity of portability is attractive. For larger estates or with state death taxes, bypass trusts or QTIPs remain essential planning tools. Remember that QTIP defers tax (marital deduction) but will generally cause inclusion in the survivor’s estate.
• Estate & legacy (E): If you need hard guarantees on remainder beneficiaries (e.g., children from a prior marriage), QTIP or a credit-shelter trust provides control; a sweetheart trust generally does not guarantee remainder outcomes.

There is no one-size-fits-all “best” trust. DSUE/portability is a powerful administrative shortcut for preserving exclusion amounts, but it doesn’t preserve appreciation or provide the beneficiary protections that a credit-shelter or QTIP trust can.

A sweetheart/survivor arrangement offers simplicity and survivor autonomy but at the cost of potential estate tax exposure and weaker legacy guarantees.

Use the R.I.T.E. framework — weigh risk protection, investment growth, tax mechanics, and legacy goals — and run scenarios before picking the path.

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For Informational Purposes only and not for legal or tax advice.

About the Author – Marie Feindt, JD 

Marie Feindt is the Planning Specialist – Estate Attorney at Members’ Wealth, a boutique wealth management firm that offers a comprehensive and holistic approach to serving individuals, families, business owners, and institutions. The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of estate planning experience, Marie and the Members’ Wealth team thrive on bringing clarity and confidence to clients’ unique situations. She believes everyone, young adults and older, need the essential documents to conserve and preserve and transfer assets accumulated during lifetime to the next generation.

Marie received her JD from Widener University School of Law, her bachelor’s degree from Penn State University, University Park and is currently enrolled in the Villanova University Charles Widger School of Law Graduate Tax Program.

Marie is an Adjunct Faculty at the Villanova University College of Professional Studies Paralegal Professional Certificate Program where she teaches Estates & Trusts and Civil Procedure & Litigation and Torts & Personal Injury Law.

Marie volunteers for a monthly legal clinic at The Salvation Army in Chester, PA facilitated by the Christian Legal Clinic of Philadelphia. She has served on the Women’s Commission of Delaware County and as a Board Member for the Delaware County Literacy Council.

Marie enjoys biking, reading, yoga and walking in her free time with her husband and three children.

To get in touch with the Members’ Wealth team today, I invite you to email info@memberswealthllc.com or call (267) 367-5453. 

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