Credit Shelter Trust Attorneys

The Federal Estate Tax law usually provides a unified credit for an individual that exempts a certain amount from the estate and gift tax. A Pennsylvania estate plan for married couples with assets exceeding the lifetime exemption of one spouse involves the interaction of the unified credit and the unlimited marital deduction.

The unlimited marital deduction allows for assets to pass from a deceased spouse to a surviving spouse with no Federal Estate Tax. A common and effective Pennsylvania estate plan for married couples whose combined net worth exceeds the unified credit calls for the use of the marital deduction in conjunction with a Credit Shelter Trust, also commonly referred to as a “Bypass Trust.” This Pennsylvania estate planning technique enables married couples to shelter twice the tax exemption amount.

For married couples in PA whose combined estate exceeds the exemption amount, a simple Will does not serve any tax planning purpose since a simple Will can only serve to shield the exemption amount for one individual. Although the estate of the first spouse to die would pass to the surviving spouse tax free because of the unlimited marital deduction, at the surviving spouse’s subsequent death, the entire estate, except the exemption amount, would be taxed for Federal Estate Tax purposes.


Credit Shelter Trust in Pennsylvania

A Credit Shelter Trust provides a solution. If prepared correctly, a Credit Shelter Trust as part of a Pennsylvania estate plan can allow an amount equal to the exemption to pass into a trust at the first spouse’s death. Upon the death of the second spouse, the second spouse can pass an amount equal to his or her exemption tax free and the amount in the Credit Shelter Trust can also pass tax free. In this manner, the married couple can pass twice the current exemption amount.


Contact Experienced Estate Planning Attorneys in Montgomery County, PA

Married couples in PA who are considering the implementation of a Credit Shelter Trust for tax planning purposes should always seek the assistance of an experienced PA estate planning attorney to ensure proper drafting. An experienced PA estate planning attorney can also provide guidance as to other useful estate planning documents and/or tax planning strategies.

The Martin Law Firm, located in Blue Bell, Montgomery County, PA, assists clients with Pennsylvania estate planning, including the Credit Shelter Trust and other important techniques to save money from taxation while accomplishing the client’s goals and wishes. To speak with an experienced Pennsylvania estate planning attorney, please contact The Martin Law Firm at 215-646-3980.