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 Austin 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 legal document that allows married individuals residing in Austin, Texas, to outline their wishes regarding the distribution of their assets after their death. This type of will is specifically designed for married couples who have children. The will consists of three main components: the Credit Shelter Trust, the Marital Trust, and a Trust for Children. Each of these trusts serves a specific purpose in managing and distributing the estate of the deceased. The Credit Shelter Trust, also known as a bypass trust or an A/B trust, is created to take full advantage of the federal estate tax exemption. It allows a portion of the deceased's assets, typically up to the maximum allowable exemption, to be held in trust for the benefit of the surviving spouse while bypassing estate taxes upon their death. The assets in this trust are not included in the spouse's estate when they pass away, offering protection from estate taxes for the heirs. The Marital Trust, also known as a TIP (Qualified Terminable Interest Property) trust, is designed to provide support and income to the surviving spouse during their lifetime while ensuring that the remaining assets are ultimately passed on to the children or other beneficiaries. The surviving spouse has the right to use and benefit from the trust assets, but they do not have complete control over the trust. The assets remaining in the Marital Trust are included in the estate of the surviving spouse upon their death. The Trust for Children is specifically established to protect and manage assets for the children or other designated beneficiaries. These assets may include financial holdings, real estate, or other valuable property. The terms of the trust outline how the assets are to be managed, invested, and distributed to the beneficiaries. This trust can also provide for the care and expenses of the children until they reach a specific age or milestone determined by the deceased. It is important to note that there may be variations or alternative types of Austin Married Person's Wills for the State of Texas with Children With a Credit Shelter Trust for Spouse and a Trust for Children — Marital Trust, as estate planning laws and preferences can vary. It is recommended to consult with an attorney experienced in estate planning to ensure that the specific document accurately reflects the individual's wishes and meets all legal requirements.The Austin 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 legal document that allows married individuals residing in Austin, Texas, to outline their wishes regarding the distribution of their assets after their death. This type of will is specifically designed for married couples who have children. The will consists of three main components: the Credit Shelter Trust, the Marital Trust, and a Trust for Children. Each of these trusts serves a specific purpose in managing and distributing the estate of the deceased. The Credit Shelter Trust, also known as a bypass trust or an A/B trust, is created to take full advantage of the federal estate tax exemption. It allows a portion of the deceased's assets, typically up to the maximum allowable exemption, to be held in trust for the benefit of the surviving spouse while bypassing estate taxes upon their death. The assets in this trust are not included in the spouse's estate when they pass away, offering protection from estate taxes for the heirs. The Marital Trust, also known as a TIP (Qualified Terminable Interest Property) trust, is designed to provide support and income to the surviving spouse during their lifetime while ensuring that the remaining assets are ultimately passed on to the children or other beneficiaries. The surviving spouse has the right to use and benefit from the trust assets, but they do not have complete control over the trust. The assets remaining in the Marital Trust are included in the estate of the surviving spouse upon their death. The Trust for Children is specifically established to protect and manage assets for the children or other designated beneficiaries. These assets may include financial holdings, real estate, or other valuable property. The terms of the trust outline how the assets are to be managed, invested, and distributed to the beneficiaries. This trust can also provide for the care and expenses of the children until they reach a specific age or milestone determined by the deceased. It is important to note that there may be variations or alternative types of Austin Married Person's Wills for the State of Texas with Children With a Credit Shelter Trust for Spouse and a Trust for Children — Marital Trust, as estate planning laws and preferences can vary. It is recommended to consult with an attorney experienced in estate planning to ensure that the specific document accurately reflects the individual's wishes and meets all legal requirements.
