Complex Will with Credit Shelter Marital Trust for Large Estates - Nebraska 2025

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When the surviving spouse dies, any remaining principal can be distributed to children or remain in trust for their benefit, as you direct. Even though the surviving spouse has access to income (and principal, if needed), the assets in the credit shelter trust are not considered part of the survivors taxable estate.
Trusts are beneficial to ensure that your long-term financial plans are implemented in order to protect and preserve your assets. Trusts also offer more privacy since they are not administered through probate.
One of the disadvantages of a credit shelter trust is that it does not give the surviving spouse immediate access or full control over the trust assets. Instead, the spouse can generally receive income from the trust and may be allowed to use the trust principal to pay for health, education, and maintenance as needed.
Which Takes Precedence: Will or Trust? In California, a trust often supersedes a will if a person has created both documents. A trust takes effect immediately, while the trustee is still alive, whereas a will only takes effect after the death of the executor.
Types of Trusts To Minimize Taxes Irrevocable trust: An irrevocable trust is a trust that you cant terminate or change. Grantor retained annuity trust (GRAT): A GRAT is a type of irrevocable trust. Intentionally defective grantor trust (IDGT): An IDGT is another type of irrevocable trust.
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What happens to a living trust when one spouse dies is that it remains revocable until both spouses have passed away. A joint living trust will have a sub-trust called a survivors trust where the assets remain accessible and controllable by the surviving spouse.
No additional tax return: Once a credit shelter trust is funded, the trustee of that trust will have to file a fiduciary income tax return (Form 1041) every year.
Having a revocable trust in place can help you avoid probate, which is the process a court takes to finalize your legal and financial matters after your death. Probate can be lengthy and expensive for your loved ones. Estates in probate also become a matter of public record.
Additionally, assets that are placed in a credit shelter trust receive a one-time step-up in basis at the time the trust is funded.

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