A New York Complex Will — Credit Shelter Marital Trust for Spouse is a legal arrangement in the state of New York that is designed to protect and manage a person's assets upon their passing. This type of trust allows married couples to maximize their estate tax exemptions and ensure that their assets are safeguarded for the surviving spouse. The primary purpose of a Credit Shelter Marital Trust for Spouse is to take advantage of the federal estate tax exemption. It enables a married individual to bequeath assets to their spouse while still fully utilizing their own estate tax exemption. By doing so, the trust helps minimize or eliminate estate taxes upon the death of the surviving spouse, ultimately preserving wealth for future generations. A New York Complex Will — Credit Shelter Marital Trust for Spouse has several key features and benefits. First and foremost, it allows the deceased spouse to transfer assets to the trust, sheltering them from estate taxes. The surviving spouse may receive distributions from the trust for their welfare, health, education, or general support as outlined in the terms of the trust. There are different variations or types of New York Complex Wills — Credit Shelter Marital Trusts for Spouses, depending on the specific needs and preferences of the individuals. Some of these variations include: 1. Traditional Credit Shelter Marital Trust: This type of trust allows the deceased spouse's assets to be transferred to the trust upon their passing, preserving the estate tax exemption while providing financial security for the surviving spouse. 2. Qualified Terminable Interest Property (TIP) Trust: This trust is commonly used when a person has children from a previous relationship or wishes to control the ultimate disposition of the assets. It allows the deceased spouse to provide income to the surviving spouse for life, with the principal passing to other beneficiaries upon the surviving spouse's death. 3. Estate Tax Exemption Maximization Trust: This trust is designed to maximize the federal estate tax exemption by fully utilizing both spouses' exemptions, potentially shielding a significant amount of wealth from estate taxes. 4. Decanting Trust: This option allows for the modification of an existing trust, altering its terms or removing any perceived shortcomings to better suit the needs and goals of the surviving spouse. When establishing a New York Complex Will — Credit Shelter Marital Trust for Spouse, it is crucial to seek the guidance of an experienced estate planning attorney. They can provide personalized advice based on individual circumstances and help draft documents that accurately reflect one's wishes while minimizing tax liabilities.
New York Complex Will - Credit Shelter Marital Trust for Spouse
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A credit shelter trust (CST) is a trust created after the death of the first spouse in a married couple. Assets placed in the trust are generally held apart from the estate of the surviving spouse, so they may pass tax-free to the remaining beneficiaries at the death of the surviving spouse.
Generally, for New York estate tax purposes, if the value of assets passing to beneficiaries other than a spouse or charity is below a certain threshold ($6.58 million in 2023), the assets are fully exempt from tax and no New York estate taxes will be due. New York Estate Planning - J.P. Morgan jpmorgan.com ? insights ? wealth-planning jpmorgan.com ? insights ? wealth-planning
Upon the death of the surviving spouse, the trust transfers to the heirs, who are exempt from the estate tax that would have resulted from a combined inheritance. Disadvantages of a CST include formation costs and the surviving spouse's lack of control.
CSTs are created upon a married individual's death and funded with that person's entire estate or a portion of it as outlined in the trust agreement. These assets then flow to the surviving spouse.
When the credit shelter trust is initially funded upon the death of one spouse, the assets that are placed under the trust receive a step-up in basis. This is an important consideration, because any assets held in a CST don't receive a second step-up in basis upon the death of the surviving spouse.
Any amount of property left to a surviving spouse is exempt from both federal and New York estate tax (this is referred to as the ?marital deduction?). There is a big distinction between New York state and federal law, however. What Is New York's Estate Tax Cliff? | Cerity Partners ceritypartners.com ? insights ? what-is-new-yorks-... ceritypartners.com ? insights ? what-is-new-yorks-...
The surviving spouse This trust is irrevocable and will pass to beneficiaries other than the surviving spouse (usually their children). The surviving spouse must follow the trust's plan without overly benefiting from its operation, but this trust often passes income to the surviving spouse to live on for the rest of their life. credit shelter trust | Wex - Law.Cornell.Edu cornell.edu ? wex ? credit_shelter_trust cornell.edu ? wex ? credit_shelter_trust
Unlike a QTIP trust, the assets of the credit shelter trust are not included in the beneficiary's gross estate and, as a result, are not subject to estate tax at the beneficiary's death (in other words, the assets bypass the beneficiary's estate). Common Types of Trusts: Which One is Right for You? comitersinger.com ? blog ? common-types-... comitersinger.com ? blog ? common-types-...