Marital trusts, also called A trusts, can help grantors keep assets in their family, avoid estate taxes, and reduce the size of their and their spouse’s taxable estate, all while providing the surviving spouse income to live off of in the form of income generated from the principle in the trust. A marital trust is just one type of irrevocable trust that high net worth individuals often use to avoid taxation. The attorneys at Strategic Counsel Law Group, L.C. assist clients with all types of tax- and creditor-shielding trusts and other legal financial tools.
What is the Purpose of a Marital Trust?
- Tax avoidance—The most beneficial aspect of a marital trust is reducing the size of your and your spouse’s taxable estate. You can transfer an unlimited amount of assets to your spouse without any tax consequences. This reduces the tax burden on your estate when you die. Furthermore, when your spouse passes away, the remaining assets in the marital trust are counted as part of your and your spouse’s combined taxable estate, doubling the amount of tax-free assets you/your spouse can pass on to your children and other beneficiaries when your spouse passes away.
- Ensures that assets are passed on to your children—If your spouse remarries after you pass away, a marital trust can ensure that the assets within the marital trust go to your children or grandchildren, as opposed to being incorporated into your spouse’s potential future spouse. In short, a marital trust makes sure your children receive their inheritance.
- Shelters assets from your spouse’s creditors—If your spouse has debt that is not part of the marital property, or incurs debt after you have passed away, the assets within a marital trust are sheltered from these creditor claims.
A Marital Trust Doubles Your Spouse’s Estate Tax Exemption
In 2022, the federal estate tax exemption is $12.06 million for an individual, which means that an individual can leave up to that amount for their beneficiaries without paying any estate taxes. For a couple the amount is doubled to $24.12 million. If you pass away before your spouse and leave your half of the marital assets (or any amount) in a marital trust, those assets pass to your spouse tax-free due to the marital deduction rule. Furthermore, when your spouse dies, the assets in the marital trust are combined with your spouse’s remaining assets into the couple’s estate tax exemption of $24.12 million, instead of the individual estate tax exemption of $12.06 million.
Call a Marital Trust Attorney Today
High net worth individuals seeking to reduce their taxable estate, shield assets from creditors, or ensure that their children or grandchildren receive their inheritance may benefit from creating a marital trust. The Strategic Counsel Law Group, L.C. Our marital trust attorneys can incorporate a marital trust into your estate plan, as well as additional trusts that often work in conjunction with marital trusts. Call us today at 813-286-1700 to schedule a free consultation.
