Marital
Deduction Trust
This allows the
deductible gift to the surviving spouse to be made in trust
so a trustee can manage the investments. The tax law
provides that the gift, while not absolute, still qualifies
for the marital deduction if the spouse must get all the
income and has the power to say who gets the money remaining
in the trust at his or her death. This is usually used
together with a family or credit shelter trust which takes
advantage of the credit to pass $1,500,000 tax free.
Remember the spouse can get all the income from that trust
too, but cannot have the power to say who gets the remaining
assets of the family trust on his or her death. That power
would cause the family trust assets to be in the surviving
spouse's taxable estate.
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