Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Tuesday, July 24, 2007

Supercharged Credit Shelter Trust

Mitchell M. Gans, Jonathan G. Blattmachr, and Diana S. C. Zeydel have published their article, Supercharged Credit Shelter Trust, in the July/August 2007 issue of Probate and Property.

Here are their summaries and conclusions:

Given the additional wealth the Supercharged Credit Shelter Trust provides for descendants, as compared to the amount of wealth provided under a conventional credit shelter trust, it probably should be considered in all cases in which the spouses have sufficient net worth. Although the reciprocal trust doctrine may be perceived as posing a threat to the viability of the strategy, with proper drafting it does not create any additional estate or gift tax risk, it poses no downside risk for income tax purposes, but, most important, the application of the doctrine may be effectively avoided by varying the timing and provisions of the two trusts. Thus, the strategy provides a sound means significantly to enhance the effectiveness of the federal estate tax exemption of the spouse dying first and, through reverse QTIP elections for each lifetime QTIP truest at the time each is created, the GST exemptions of both spouses.


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