The Oklahoma Complex Will — Credit Shelter Marital Trust for Spouse, also known as a Marital Trust or an A-B Trust, is a legal instrument commonly used as part of estate planning in Oklahoma. It provides a mechanism for married couples to protect assets and minimize estate taxes upon their passing. This detailed description will outline the key features and types of this complex will specifically tailor to Oklahoma laws. A Credit Shelters Marital Trust is created by a married individual and is designed to avail the maximum federal estate tax exemption allowed by law. It allows the granter to leave assets to their spouse while also taking advantage of the applicable estate tax exemption amount, thus reducing the overall estate tax liability upon the eventual passing of the surviving spouse. The Oklahoma Complex Will — Credit Shelter Marital Trust for Spouse typically involves two major components: 1. Credit Shelter Trust: This component of the complex will, often referred to as the "A Trust" or the "Family Trust," is established upon the death of the first spouse. It involves funding the trust with an amount equal to or less than the federal estate tax exemption limit (depending on the desired level of estate tax protection). The surviving spouse is entitled to income generated by this trust and may also have access to the principal if needed for specific purposes defined within the trust document, such as healthcare expenses or home maintenance. 2. Marital Trust: The Marital Trust, sometimes called the "B Trust" or "Survivor's Trust," is also created upon the death of the first spouse. It is designed to hold assets that qualify for the unlimited marital deduction, meaning that they can pass to the surviving spouse tax-free. The surviving spouse has the right to use the principal and income of this trust during their lifetime, providing them with financial security. However, they do not have complete control over the distribution of the trust assets upon their death, as the granter can specify who will ultimately receive any remaining assets. The ultimate goal of the Oklahoma Complex Will — Credit Shelter Marital Trust for Spouse is to protect the family's wealth by minimizing estate taxes while ensuring financial security for the surviving spouse. By utilizing this estate planning tool, couples can maximize their estate tax exemptions, effectively doubling their estate's protection from taxes. It allows the surviving spouse to have access to the necessary funds while preserving assets for future generations or other beneficiaries determined by the granter. It should be noted that the specific provisions and details of the Oklahoma Complex Will — Credit Shelter Marital Trust for Spouse may vary depending on individual circumstances and preferences. Consulting with an experienced estate planning attorney in Oklahoma is crucial to customize the trust's terms according to state laws and personal goals.
Oklahoma Complex Will - Credit Shelter Marital Trust for Spouse
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Credit Shelter Trust vs Marital Trust - Is a Marital Trust the Same as a Credit Shelter Trust? No. A Marital Trust is a type of Credit Shelter Trust. You and your spouse can use a Marital Trust to pass assets to a surviving spouse, children or grandchildren.
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.
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.
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.
The primary benefit of CSTs is that the surviving spouse can use the trust's principal and income during the remainder of their lifetime, for example, for medical or educational expenses. The remaining assets then pass to the beneficiaries and are not subject to estate taxes.
Among the disadvantages are the following: As irrevocable trusts, once formed, they are exceedingly difficult to dissolve or amend. Only provides an estate tax exemption of up to $24.12 million in 2022 (or $25.84 million in 2023) Requires the transfer of assets into the trust, which can be a time-consuming procedure.
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.
Also called an "A" trust, a marital trust goes into effect when the first spouse dies. Assets are moved into the trust upon death and the income that these assets generate go to the surviving spouse?under some arrangements, the surviving spouse can also receive principal payments.