Married couples with children or other loved ones to whom they wish to leave assets should seriously consider including Credit Shelter Trusts in their Wills. Currently, in New Jersey, every person can bequeath assets of up to $675,000 in his/her Will without incurring any NJ estate taxes. In the case of a married couple, this means a total of $1,350,000 may be bequeathed estate tax free.
A Credit Shelter Trust (also known as a bypass trust) is a great way to do this. It works as follows for a married couple:
– Each spouse includes a Credit Shelter Trust in his or her Will. Please note that since no one knows which spouse will die first, it is imperative that each spouse’s Will includes a Credit Shelter Trust.
– Upon the death of the first spouse (“spouse 1“), the assets in his or her Credit Shelter Trust, if written accordingly, will be available to the surviving spouse (“spouse 2“), but will n0t be included in spouse 2’s estate upon his or her death.
– Upon the death of spouse 2, assets of up to $675,ooo from spouse 2’s estate, plus assets remaining in spouse 1’s Credit Shelter Trust of up to $675,000, will go to the beneficiaries and will be NJ estate tax free.
Credit Shelter Trusts can also help reduce a married couples federal estate taxes. In 2012, each person can bequeath up to $5,000,000, federal tax free, to children or other loved ones. Including bypass trusts in their Wills is certainly a very useful estate planning option for married couples.
Estate planning can be very complicated. Working with an experienced estate planning attorney can help you maximize what your heirs ultimately inherit.
Getting Legal Help
Experienced Estate Planning Attorney, Elga Goodman, can help you understand your options and determine what alternatives are best for you and your family. Contact us today at 973-841-5111.