Credit Shelter Trust Examples

Credit Shelter Trusts Examples

We have set forth below examples of two different estate plans and how the use of a credit shelter trust might reduce or eliminate Federal Estate Taxes.

Example A Simple Wills	Example B Wills with Credit Shelter Trusts
First Spouse Dies -2006 Estate - $4,000,000 All to Surviving Spouse	First Spouse Dies -2006 Estate - $4,000,000 $2,000,000 to Trust /$2,000,000 to Surviving Spouse

Surviving Spouse's Estate - $4,000,000	Credit Shelter Trust -$2,000,000 No Federal Estate Tax	Surviving Spouse -$2,000,000 No Federal Estate Tax

Second Spouse Dies -2007 Federal Estate Tax - $900,000	Second Spouse Dies - 2007 No Federal Estate Tax on Credit Shelter Trust	Second Spouse Dies - 2007 No Federal Estate Tax on Surviving Spouse’s $2,000,000 Estate

	To Children $2,000,000	To Children $2,000,000

To Children - $3,100,000	Combined to Children - $4,000,000

SAVINGS FROM
USING TRUST

$900,000

Note - If the combined estates are less than $4,000,000 but more than $2,000,000 - there are still tax savings - just not as great as $900,000.
For example - there could be a tax saving of $450,000 on an estate of $3,000,000.

Back to Credit Shelter Trust Explanation

Warning: This Table and its contents are for informational purposes only and do not constitute legal advice. The Table ignores many variables such as the state inheritance tax, the state death tax deduction, possible increased tax due to prior gifts, other available deductions, etc. The particular circumstances may affect a person's tax obligations and tax rates. You should consult an attorney in the state where you reside to determine how the Federal Estate Tax should be calculated in your particular situation and what tax savings might be available from the use of a credit shelter trust before acting on any information contained here.

Notice Pursuant to Final Regulations Under Circular 230, effective June 20, 2005

The opinions contained in any communication on the web site are not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code.

Updated December, 2006

Fromhold Jaffe & Adams
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Villanova, Pennsylvania 19085
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www.fromholdjaffe.com

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