More examples in Estate Planning/Trusts
Credit Shelter Trust Example
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Text in this example:
Spouse leaves everything
to surviving spouse Spouse leaves his or her half of estate
in a credit shelter trust $4 million estate $4 million for surviving spouse $2.835 million for children $4 million estate $1.5 million credit shelter trust $2.5 million $3.54 million for children No tax at first spouse's death Tax at surviving spouse's death
= $1.135 million At surviving spouse's death, trust assets pass to children tax-free Surviving spouse's tax exemption reduces tax on his or her portion of estate
(remaining tax: $460,000) Exemption eliminates tax on trust $2.5 million for surviving spouse's benefit Credit Shelter Trust No tax at first spouse's death
to surviving spouse Spouse leaves his or her half of estate
in a credit shelter trust $4 million estate $4 million for surviving spouse $2.835 million for children $4 million estate $1.5 million credit shelter trust $2.5 million $3.54 million for children No tax at first spouse's death Tax at surviving spouse's death
= $1.135 million At surviving spouse's death, trust assets pass to children tax-free Surviving spouse's tax exemption reduces tax on his or her portion of estate
(remaining tax: $460,000) Exemption eliminates tax on trust $2.5 million for surviving spouse's benefit Credit Shelter Trust No tax at first spouse's death