The phrase "credit shelter trust" trust refers to a trust that is designed to make maximum use of the unified credit for estate taxes -- which is also known as the lifetime exemption. Each individual is allowed a once-in-a-lifetime exemption from estate and gift taxes. However, the exemption is computed as a credit against the estate and gift tax that is sufficient to offset the tax on an estate of a specified size. A credit shelter trust is designed to make maximum use of the unified credit for estate taxes. Each individual is allowed a once-in-a-lifetime credit from estate and gift taxes. For 2009 the exempt amount is 3.5 million. By the year 2010 the inheritance tax is eliminated but if congress does not make the elimination permanent in the following year the tax will return and the exempt amount will be $1.0 million. Since it is any one's guess what congress will do, planning to maximize the credit is still the smartest estate plan for married couples to utilize.
The parties must split there assets so that roughly 1/2 half of the assets are held by Spouse One and 1/2 of the assets are held by Spouse Two. Each spouse then provides by will or living trust that upon their death the amount of their assets up to the exemption amount are to be held in a trust known as the credit shelter trust. The trust typically provides that the surviving spouse has entitlement to the income and to the principal provided that there are "ascertainable standards" established in accordance with IRS law for the trustee to distribute principal to the surviving spouse.
When the first spouse dies the credit shelter trust is exempt from tax. When the surviving spouse dies the surviving spouse's estate up to the exempt amount is also exempt from tax. This way the parties can exempt twice as much of their combined estates from taxation and save their loved ones substantial tax savings without losing beneficial use and enjoyment of their assets during their lifetimes.
The Odessa Married Person's Will for the State of Texas with Children With a Credit Shelter Trust for Spouse and a Trust for Children — Marital Trust is a comprehensive legal document designed to protect the assets of a married individual residing in Odessa, Texas, who has children. This specific type of will incorporates various trusts to ensure the spouse and children are provided for in the event of the person's passing. It is crucial to understand the different types of trusts associated with this will to make informed decisions about estate planning. 1. Credit Shelter Trust: The Credit Shelter Trust, also known as a bypass trust or a family trust, aims to utilize the estate tax exemption of the deceased person. By placing assets in this trust, the value of those assets is excluded from the surviving spouse's taxable estate, potentially reducing estate taxes. 2. Marital Trust: This trust, also referred to as a TIP (Qualified Terminable Interest Property) trust, provides the surviving spouse with income from the trust assets while preserving the principal for the ultimate benefit of the children. It ensures that the surviving spouse is financially supported during their lifetime, maintaining control over the assets, but also ensures that the remaining assets pass to the children upon the spouse's passing. 3. Trust for Children: This trust is created to protect and manage assets on behalf of the children. It allows the parents to determine the distribution of assets to their children's benefit, ensuring they are provided for during their dependent years. The parents can specify conditions for distributing assets, such as reaching a certain age, educational milestones, or other significant life events. These trusts are carefully crafted to address the unique circumstances of married individuals residing in Odessa, Texas, who have children. They provide the necessary legal framework to preserve wealth, minimize tax liabilities, and ensure the financial well-being of both the surviving spouse and the children. It is essential to consult with an experienced estate planning attorney to tailor the will to your specific needs and goals.The Odessa Married Person's Will for the State of Texas with Children With a Credit Shelter Trust for Spouse and a Trust for Children — Marital Trust is a comprehensive legal document designed to protect the assets of a married individual residing in Odessa, Texas, who has children. This specific type of will incorporates various trusts to ensure the spouse and children are provided for in the event of the person's passing. It is crucial to understand the different types of trusts associated with this will to make informed decisions about estate planning. 1. Credit Shelter Trust: The Credit Shelter Trust, also known as a bypass trust or a family trust, aims to utilize the estate tax exemption of the deceased person. By placing assets in this trust, the value of those assets is excluded from the surviving spouse's taxable estate, potentially reducing estate taxes. 2. Marital Trust: This trust, also referred to as a TIP (Qualified Terminable Interest Property) trust, provides the surviving spouse with income from the trust assets while preserving the principal for the ultimate benefit of the children. It ensures that the surviving spouse is financially supported during their lifetime, maintaining control over the assets, but also ensures that the remaining assets pass to the children upon the spouse's passing. 3. Trust for Children: This trust is created to protect and manage assets on behalf of the children. It allows the parents to determine the distribution of assets to their children's benefit, ensuring they are provided for during their dependent years. The parents can specify conditions for distributing assets, such as reaching a certain age, educational milestones, or other significant life events. These trusts are carefully crafted to address the unique circumstances of married individuals residing in Odessa, Texas, who have children. They provide the necessary legal framework to preserve wealth, minimize tax liabilities, and ensure the financial well-being of both the surviving spouse and the children. It is essential to consult with an experienced estate planning attorney to tailor the will to your specific needs and goals.
Para su conveniencia, debajo del texto en español le brindamos la versión completa de este formulario en inglés. For your convenience, the complete English version of this form is attached below the Spanish version.
