Because all future growth in that trust is outside of a taxable estate, the trustee often advises the income beneficiary/ surviving spouse to spend down his taxable estate before taking distributions from the
bypass trust.
8) In its simplest form, portability involves the DS leaving all of his or her assets outright to his or her SS (or to a marital deduction trust for the benefit of the SS), eliminating the need for a
bypass trust (i.
Bypass trusts may have been abandoned in some estate plans in the wake of the American Taxpayer Relief Act of 2012 (ATRA), with "some clients [.
Considerable IHT savings can be made using a spousal
bypass trust.
The GST tax exemption amount is not portable; therefore, in order to take advantage of the generation-skipping tax exemption of the first spouse to die, it is advantageous to continue to fund a
bypass trust.
A credit shelter
bypass trust generally uses the estate tax unified credit applicable exclusion amount of the first spouse to die, while avoiding the estate of the second to die.
THE FOLLOW-THROUGH: While the Vinsons have wills, living wills, a durable power of attorney for healthcare, and a durable power of attorney for property, the
bypass trust is still on their to-do list.
The new edition takes recent changes to the law into account, has new graphics and charts, and replaces the
Bypass Trust with the Family Security Trust.
In a family intervivos trust with distributions to the survivor's trusts, a
bypass trust and a QTIP trust, assuming that the donors have made no taxable lifetime gifts, the person making the allocation would typically make an allocation of the GST tax exemption of the first grantor to die to the
bypass trust.
With a
bypass trust, "the surviving spouse gets all the benefits of the assets without the family receiving the tax burden," he says.
The text analyzes thoroughly the merital deduction, use of credit shelter bypass, use of the
bypass trust, and how to arrange these instruments so as to minimize federal estate taxes and still provide a spouse with adequate income from the estate and give the spouse power to invade the principal of the trust without losing tax shelter.
What if I have set up grantor type trusts or have an existing
bypass trust in operation--can I somehow distribute the assets to my surviving spouse and then step-up again at death?
