The concepts contained herein are not intended to serve as advice and may have legal, tax and accounting implications. Consult your Attorney and CPA for advice.
B-Trusts - This type of trust can be established to ensure that the Estate Tax Exemption Amount1 of both spouses are used most efficiently regardless of when either spouse dies. For example, the unused Estate Tax Exemption Amount is applied to the estate of the first spouse upon his/her creation of a B-Trust. The amount placed in the B-Trust is exempt from estate taxes. At the second spouse's death, the assets in the B-Trust pass to the heirs free from estate tax. Then, upon the surviving spouse's death, his/her Estate Tax Exemption Amount is applied to his/her estate.
Marital Trusts - A trust which pays all of its assets to the surviving spouse. A marital trust may postpone the assessment of estate taxes until the death of the surviving spouse but may not completely shelter your estate from taxes. When the surviving spouse dies, the assets inside the marital trust are included in the surviving spouse's gross estate. If the gross estate is large enough, estate taxes may be assessed.
Qualified Terminable Interest Property (QTIP) Trusts - This type of trust is similar to other marital trusts in that it allows the deceased spouse to provide ongoing income for the surviving spouse. It is, however, different from other marital trusts because the deceased spouse still designates beneficiaries for the remaining trust assets at the surviving spouse's death (versus the surviving spouse designating the beneficiaries). At the death of the surviving spouse, the remaining estate will be included in the surviving spouse's gross estate and may be subject to estate taxes.
Unlimited Marital Deduction - Federal estate tax law allows you to distribute your entire estate to your surviving spouse, estate and gift tax free, provided the surviving spouse is a U.S. citizen.
Charitable Remainder Trusts (CRT) - A CRT can convert your highly appreciated assets into a lifetime income source without incurring capital gains or estate taxes. Additionally, one or more charities you select may benefit from your gift. By establishing a CRT, you can create a source of lifetime income to supplement your retirement, defer capital gains, estate taxation and current income taxes by a charitable deduction. You also make a significant future charitable gift, and potentially increase inheritance to your family and heirs.
Annual Gift Tax Exclusion - In 2016, an individual is allowed to gift as much as $14,000 per donee (married couples can gift up to $28,000) free of gift taxation. This enables you to reduce the value of your estate and transfer it in a controlled manner over time.