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 Fort Worth 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 outlines the distribution of a person's assets and estate after their death. It is designed specifically for married individuals residing in Fort Worth, Texas, who have children and wish to provide for both their spouse and children in the event of their passing. This particular type of will includes two trusts: a Credit Shelter Trust for the spouse and a Trust for the children, known as the Marital Trust. The purpose of these trusts is to ensure the protection and efficient handling of assets for the surviving spouse and children while also minimizing estate taxes. The Credit Shelter Trust, also referred to as the bypass trust or the family trust, is established to benefit the surviving spouse. It allows the spouse to use the trust's income and, in some cases, its principal for their living expenses while preserving the remaining assets for the children. This trust can help reduce estate taxes by utilizing the federal estate tax exemption of the deceased spouse. On the other hand, the Trust for Children, also known as the marital trust, is created for the benefit of the children. It typically comes into effect after the surviving spouse's death or when certain conditions are met. This trust can provide financial support, education expenses, and other specified needs of the children by distributing the assets held within the trust. By utilizing a Fort Worth Married Person's Will with these trusts, individuals can ensure the protection and smooth transfer of their assets to their loved ones, while potentially minimizing estate taxes and other associated costs. It is important to consult with an attorney or estate planning professional to draft and customize these trusts based on an individual's specific circumstances, as there may be variations or additional types available depending on the situation.The Fort Worth 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 outlines the distribution of a person's assets and estate after their death. It is designed specifically for married individuals residing in Fort Worth, Texas, who have children and wish to provide for both their spouse and children in the event of their passing. This particular type of will includes two trusts: a Credit Shelter Trust for the spouse and a Trust for the children, known as the Marital Trust. The purpose of these trusts is to ensure the protection and efficient handling of assets for the surviving spouse and children while also minimizing estate taxes. The Credit Shelter Trust, also referred to as the bypass trust or the family trust, is established to benefit the surviving spouse. It allows the spouse to use the trust's income and, in some cases, its principal for their living expenses while preserving the remaining assets for the children. This trust can help reduce estate taxes by utilizing the federal estate tax exemption of the deceased spouse. On the other hand, the Trust for Children, also known as the marital trust, is created for the benefit of the children. It typically comes into effect after the surviving spouse's death or when certain conditions are met. This trust can provide financial support, education expenses, and other specified needs of the children by distributing the assets held within the trust. By utilizing a Fort Worth Married Person's Will with these trusts, individuals can ensure the protection and smooth transfer of their assets to their loved ones, while potentially minimizing estate taxes and other associated costs. It is important to consult with an attorney or estate planning professional to draft and customize these trusts based on an individual's specific circumstances, as there may be variations or additional types available depending on the situation.
