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.
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.
Here are some questions clients, beneficiaries, and Trustees ask:
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.
Tax shelter and asset protection.
Yes, limited only by legal obligations you may have to your spouse.
No, they are often called “Family Trusts” because the spouse and children can be beneficiaries.
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Peter Klenk is the founding member of Klenk Law, a seven attorney boutique estate planning law firm. We serve clients in Pennsylvania, New Jersey, New York, Minnesota and Florida. Peter Klenk received his Masters in Taxation LL.M. from NYU Law School and his J.D. from the University of Minnesota Law School. He served his country in the Navy JAGC during Desert Storm. Easy to talk to, feel free to call Peter for an appointment. We will make the process as easy as possible!
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