ESTATE PLANNING, WILLS & TRUSTS
CREDIT SHELTER (BY-PASS) TRUSTS
Estate Planning with Credit Shelter Trusts
The Credit Shelter Trust, also referred to as a By-Pass Trust or the B Trust of an AB Trust Plan, creates the opportunity for a married couple to utilize two estate tax exemptions, rather than one. For example, if the Last Will and Testament or Revocable Trust Agreement of the first spouse to die devises all the assets to the surviving spouse, the estate tax exemption of the first spouse is lost. Alternatively, the assets can be transferred to a Credit Shelter Trust rather than outright to the surviving spouse. With a standard Credit Shelter Trust in place, the income and principal of the trust assets are used for the medical care, education, support and maintenance in reasonable comfort of the surviving spouse during their lifetime. Upon the death of the surviving spouse, the assets are transferred to the children or heirs without being included in the estate of the surviving spouse and without the imposition of an estate tax-- maximizing the total value of the assets transferred to the children or heirs.
In 2020, the maximum estate tax exemption equivalent is $11,580,000 per person. Therefore, a married couple can currently transfer up to $23,160,000 to their children or heirs without paying estate tax with the use of a Credit Shelter Trust. If a Credit Shelter Trust is not implemented, the total value of the assets that can be transferred to the children or heirs is generally limited to $11,400,000 before being subjected to an estate tax.
Furthermore, assets transferred to a surviving spouse upon the death of the first spouse are generally not subject to an estate tax pursuant to the Unlimited Marital Deduction. The Unlimited Marital Deduction allows married individuals to transfer an restricted amount of assets between themselves during their lifetimes, and upon death without the imposition of a gift or estate tax. Through proper estate planning, an estate tax is generally not imposed at the time of death of the first spouse, regardless of the size of the estate. Even an estate valued at $1,000,000,000 (one billion dollars) would not be subject to an estate tax at the time of death of the first spouse if proper estate planning has been implemented.
Please contact us today to discuss your immediate estate planning needs and long-term wealth preservation goals.
Asset Protection & LLC Formation
Business Formation & Contracts
Conservatorships & Powers of Attorney
Estate Planning, Wills & Trusts
Credit Shelter (By-Pass) Trusts
Grantor Retained Annuity Trusts
Health Care Power of Attorneys
Intentionally Defective Grantor Trusts
Irrevocable Life Insurance Trusts
Qualified Personal Residence Trusts
Employee Stock Ownership Plans (ESOPs)
Probate & Estate Administration
Tax Settlement & Offers in Compromise
Collection Due Process Hearings
Discharging Taxes in Bankruptcy
Will Contests, Business & Estate Litigation
Law Office of John Kachmarsky
171 Church Street, Suite 330
Charleston, SC 29401
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CHARLESTON TAX LAW FIRM
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Charleston Tax Attorney, John Kachmarsky, and the Law Office of John Kachmarsky provide legal services in the areas of Asset Protection, LLC (Limited Liability Company) Formation, Business Formation, Contracts, Conservatorships, Powers of Attorney, Estate Administration, Probate, Estate Planning, Wills, Trusts, FINRA Disputes, Securities Losses, Income Tax, Tax Planning, Tax Controversy, Tax Litigation, Tax Settlement, and Offer in Compromise to individual and business clients in Charleston and throughout South Carolina and the U.S. including communities such as North Charleston, Summerville, Mt. Pleasant, Hilton Head Island, Myrtle Beach, Georgetown, Florence, Beaufort, Moncks Corner, Goose Creek, Isle of Palms, Daniel Island, James Island, Charleston County, Berkeley County, Dorchester County, Beaufort County, Horry County, Georgetown County, Florence County and Colleton County.
John Kachmarsky is a Charleston Tax Attorney with a Master of Laws Degree in Taxation. Charleston Tax Attorney, John Kachmarsky, is licensed to practice law in South Carolina and Georgia and represents clients before the Internal Revenue Service and the United States Tax Court.