The Unintended Consequence Of Your Living Trust
Posted on February 7, 2008 - Filed Under Legal and Law | Leave a Comment
Many couples have executed an A-B “credit shelter” trust in order to preserve estate tax exemptions for both spouses. This can potentially benefit the heirs by saving nearly one million dollars in inheritance taxes. The consequence of the credit shelter trust, however, is that estate assets are necessarily sheltered from the surviving spouse. Because language in many trusts calls for the credit shelter trust to be funded with an amount equal to the federal exclusion amount in effect at the time of death, the sheltered amount can be quite large and leave the surviving spouse with too little in the way of assets. Fortunately, proper estate planning, including the use of a “disclaimer A-B trust,” can relieve this problem.
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