Credit Shelter Trust

A credit shelter trust is primarily designed for married couples 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. In year 2024 the amount that a single person can pass tax free by life time gift or at death equals $13,610,000.00 for a single person and $27,220,000.00 million for married couples with a 40% rate on amounts in excess of those exemptions.

In order to implement an effective Credit Shelter Trust plan the married couple must split title to their assets so that roughly half the assets are held by each spouse. 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" such as for support, health and welfare for the trustee to distribute principal to the surviving spouse. The surviving spouse can even be a trustee.

When the first spouse dies, the credit shelter trust and all appreciation earned on the credit shelter assets is exempt from inheritance 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 more of their combined estates from taxation and save their loved one’s substantial inheritance tax savings without losing beneficial use and enjoyment of their assets during their lifetimes.

Contact a credit shelter trust attorney in Pembroke Pines.

I have been drafting trusts for over 40 years and I am committed to drafting your trust so that it is not just state of the art and legally compliant but also understandable to the non-lawyer. At the law office of Steven Friedman, our guiding principal has and always will be to provide our clients with competent legal representation at a fair and reasonable fee.