Credit Shelter Trusts

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Commonly Asked Questions about Credit Shelter Trusts

Do credit shelter trusts get a step up in basis?

When the credit shelter trust is initially funded upon the death of one spouse, the assets that are placed under the trust receive a step-up in basis. This is an important consideration, because any assets held in a CST dont receive a second step-up in basis upon the death of the surviving spouse.

What is the purpose of a credit trust?

A credit shelter trust (CST) is a trust created after the death of the first spouse in a married couple. Assets placed in the trust are generally held apart from the estate of the surviving spouse, so they may pass tax-free to the remaining beneficiaries at the death of the surviving spouse.

Is a credit shelter trust a good idea?

The most docHub benefit of using a credit shelter trust is that it allows spouses to use both of their estate tax exemptions to pass assets up to the exemption amount tax-free to future beneficiaries and it removes any appreciation on the assets that fund the credit shelter trust at first death from any future

Is a credit shelter trust the same as a marital trust?

Credit Shelter Trust vs Marital Trust - Is a Marital Trust the Same as a Credit Shelter Trust? No. A Marital Trust is a type of Credit Shelter Trust. You and your spouse can use a Marital Trust to pass assets to a surviving spouse, children or grandchildren.

Overview What is a credit shelter trust?

Credit shelter trusts are trusts for affluent couples to minimize or avoid their estate tax liabilities by passing on proceeds from individual estates onto the partners estate. What Is a Credit Shelter Trust (CST)? Role in Estate Taxes - Investopedia investopedia.com terms creditsheltertrust investopedia.com terms creditsheltertrust

What is the primary purpose of a trust?

The primary purpose of a trust is to: allow one party to hold property for the benefit of another party. designate heirs to an estate. reduce estate taxes for the heirs of an estate.

What is a credit trust?

Primary tabs. Credit shelter trust (CST) (also called an AB trust or a bypass trust) is a tool used by well-off married individuals to legally maximize their estate tax exemptions. The strategy involves creating two separate trusts after one spouse passes.