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This type of will or trust structure is sometimes referred to as a bypass or credit shelter trust. The technique is designed to take advantage of the federal credit exemption equivalent. For a married couple, the plan takes full advantage of the marital deduction except for the credit exemption equivalent (which is placed in trust following the death of the first spouse). The tax savings arise at the death of the surviving spouse, since the credit trust is not included in that estate — even though the surviving spouse may have been an income beneficiary of that trust.
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