ACCOUNT ACCESS

Marital Trust

If you are married and your estate exceeds the federal estate tax exemption, consider using the unlimited estate tax marital deduction to reduce your estate to within the excludable limits. But, make sure that you don't over-fund the marital deduction (by keeping assets whose value is less than the exemption amount). Otherwise, the full benefit of the exemption will not be realized.

You may wish to create a marital trust funded with just enough assets to ensure that no estate tax is due upon the death of the first spouse. The remainder will fund a family trust (also called “credit shelter” or “bypass” trust) for the primary benefit of the children, which can also be available for your spouse during his or her lifetime.

Another possibility is the qualified terminable interest property (QTIP) marital deduction trust. QTIP trusts guarantee that your assets will pass to your children when your spouse dies. This trust can oftentimes be extremely beneficial to "blended families" - situations where children from prior marriages are involved and each spouse wishes to provide for their own children upon the death of the second spouse. In most cases, both spouses will establish QTIP trusts to ensure that their heirs are provided for upon the death of the second spouse.