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Bypass Trusts

What is a Bypass Trust?

A Bypass Trust, or as it is sometimes called, a “Credit Shelter Trust,” Family Trust or “B Trust,” is an Irrevocable Trust designed to hold an amount that can be sheltered from death taxes.

What is the Purpose of a Bypass Trust?

The Bypass Trust not only preserves the deceased person’s death tax credit, but it also shelters the assets from the surviving spouse’s creditors and future spouses. The Bypass Trust can also be crafted to ensure that the assets pass to the deceased spouse’s children or family at the surviving spouse’s death, keeping them out of the hands of the surviving spouse’s subsequent spouse.

Typical Estate Questions About Bypass Trusts:

Here are some questions clients, beneficiaries, and Trustees ask:

How does the Bypass Trust Protect a Beneficiary from Death Taxes?

The Bypass Trust is funded with assets that use the deceased’s estate tax and generation tax exemption. This means that when the surviving spouse dies, the exemption shelters the trust assets from tax. Further, if the trust uses Dynasty Trusts, this same protection is passed down the bloodline.

What are the Pros of the Bypass Trust?

Tax shelter and asset protection.

Can I name any beneficiary to the Bypass Trust?

Yes, limited only by legal obligations you may have to your spouse.

Can only a Spouse be a Beneficiary to a Bypass Trust?

No, they are often called “Family Trusts” because the spouse and children can be beneficiaries.

Reasonable Prices, Years of Experience, We Make Estate Planning Easier

Feel free to contact us for more information. Once we understand what you need, we provide you a flat rate for your estate planning documents. If you have us do additional work, such as transferring deeds or obtaining an appraisal for your business, we will bill hourly. For more than two decades Klenk Law has focused only on Estate Law. This experience allows us to help you understand the process. We make it easy for you to understand.

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