Marital Deduction/Credit Shelter Plan Design Options for Large Estates after Tax Cuts and Jobs Act of 2017

 (Assumes Marital-Credit Shelter Trust is Created at First Death and “Portability” of Estate Tax Exemption is NOT Elected)
2018

A) Marital Deduction Portion: (Remaining principal and growth included in gross estate of surviving spouse)

  1. Outright [will (probate), joint tenancy, beneficiary designation]
    • Absolute dominion and control of asset by spouse
  1. General Power of Appointment Trust (GPA) (“A”)
    • All income and principal can be demanded at anytime by spouse
  1. Qualified Terminable Interest Trust (Q-TIP) (“A”)
    • Income only for life to spouse, principal to children
  1. Qualified Domestic Trust (Q-DOT) (“A”) (non-citizen spouse)
    • Income only for life to spouse, principal to children
    • Must use a U.S. trustee to secure marital deduction

 

B) $11,180,000 Credit Shelter Portion: (Remaining principal and growth NOT included in  gross estate of surviving spouse)

  1. Outright [will (probate), joint tenancy, beneficiary designation]
    • Absolute dominion and control of asset by children
  1. Credit Shelter Trust (aka Family, By-Pass, “B”)
    • Income to spouse for life, remainder (principal) to children
    • Income to spouse for life, plus 5% of principal each year (non-cumulative), remainder (principal) to children.
    • Income to spouse for life, plus 5% of principal each year (non-cumulative), plus ascertainable standards (health, education, maintenance, support), remainder (principal) to children

 

Russell E. Towers  JD, CLU, ChFC
Vice President – Business & Estate Planning
Brokers’ Service Marketing Group
russ@bsmg.net