Marital Trusts

What is a Marital Trust?

A Marital Trust, or as it is sometimes called, the “A Trust,” is an Irrevocable Trust designed to hold the deceased spouse’s assets that exceed the amount that can be sheltered from death taxes. The Marital Trust assets are not taxed at the first spouse’s death, but they are part of the second spouse’s estate. If the second spouse is not wealthy, this allows the use of both spouses’ exemptions without actually giving the less wealthy spouse ownership.

What is the Purpose of a Marital Trust?

The Marital Trust shelters the assets from the surviving spouse’s creditors and future spouses. The Bypass Trust can also be crafted to ensure that the property passes to the deceased spouse’s children or family at the surviving spouse’s death, keeping them out of the hands of the second husband/wife.

Typical Estate Questions About Marital Trusts:

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

How does the Marital Trust protect a beneficiary from death taxes?

The Marital Trust allows a married couple to act as a team, maximizing their combined estate and generation-skipping tax exemptions.

What are the pros of the Marital Trust?

Tax avoidance, asset protection and providing the opportunity to keep assets within the family bloodline.

What are the cons of a Marital Trust?

The Marital Trust has a tax ID and must file a separate tax return.

Can Anyone be a Marital Trust Beneficiary?

The surviving spouse must be the only beneficiary.

Can only a Spouse be a Marital Trust Beneficiary?

Yes, to meet the estate and generation-skipping tax requirements, the spouse must be the sole beneficiary.

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If you have any questions about Marital Trusts or any other estate planning topics, feel free to contact us to schedule a free consultation. For more than two decades Klenk Law has focused only on Estate Law. We’ve seen it all, and this experience allows us to explain complex estate law and planning techniques clearly and concisely. We make it easy for you to understand Marital Trusts and Estate Planning so you can make the best decisions for yourself and your family.

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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Marital Trusts: Everything You Need to Know