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Credit shelter trusts are created after the first spouse dies. Assets are passed tax-free to other beneficiaries after the second spouse dies.
The "credit shelter trust" generally only works for married couples since (a) the tax code provides the opportunity to shift assets between married persons for an unlimited amount by means of the unlimited marital deduction; and (b) unmarried persons attempting to do the same would be impacted by the "gift tax" during life.
Credit shelter trusts These trusts allow both spouses to take full advantage of their estate tax exemptions, which in 2024 is a whopping $13.61 million per person, or $27.22 million per married ...
Credit shelter trust: This kind of trust is designed to greatly reduce or even eliminate estate taxes when a surviving spouse dies and passes assets from the marriage onto children or other ...
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Depending on the trust structure, a grantor may receive tax advantages for using an irrevocable trust. For example, it could help lower estate and income taxes. Also, it may provide shelter for ...
Some creditors may compel payment out of the trust, particularly those who supply the beneficiary with "necessaries" (usually food and shelter, but sometimes clothing and transportation, if these are not extravagant). Most jurisdictions also permit the invasion of spendthrift trust assets to satisfy awards of child support and alimony.
The beneficiaries of a trust are the beneficial owners of equitable interests in the trust assets, but they do not hold legal title to the assets. Thus this kind of trust fulfills the goal of asset protection planning, i.e. to insulate assets from claims of creditors without concealment or tax evasion.