"It might have been best in the past to pack equities into the bypass trust
to maximize estate tax savings," said Shenkman.
Before the enactment of the portability provisions, spouses who both had assets exceeding the lifetime exclusion amount would typically set up a plan requiring that, on the death of the first spouse, an amount of assets equal to the exclusion amount would pass to a "credit shelter trust" or a bypass trust
for the benefit of the surviving spouse.
Spousal bypass trusts
complete the tax planning cycle for all concerned and potentially save a massive 40 per cent IHT liability on the estate above the nil rate band.
* Does the taxpayer need to use IRA funds to fund a $600,000 unified credit bypass trust
? The Roth IRA is an excellent vehicle for funding a bypass trust
, because the distributions to the trust beneficiaries will be tax-free.
THE INVESTMENT ENVIRONMENT OVER THE LAST YEAR has been tough on everyone, including credit shelter trusts (also called B Trusts or Bypass Trusts
), It is up to the trustee of the credit shelter trust (CST) to manage market performance and the tax costs of their investment portfolios while still meeting the requirements of the trust.
So-called "bypass trusts
" represent the preservation leg of unified credit planning.
Depending on their purpose, these trusts are known as family trusts, credit equivalent bypass trusts
or credit shelter trusts.
For instance, if the Family Trust requires the income of the Marital and Bypass trusts
to be distributed to Mom, the practitioner might assume the distribution was made on a current basis to the Survivor's Trust.
Testamentary bypass trusts
are often structured this way.
estate tax stuff like bypass trusts
and qualified terminable interest property trust provisions.
Through bypass trusts
and a life insurance trust, Henry and Judith, a married couple, will escape estate tax on their $2 million estate.
Beginning next year, we will be faced with funding larger bypass trusts
. At that dollar level, avoiding the use of retirement assets will be almost impossible.