Five Ways to Use Trusts
- Trusts can provide professional management for assets set aside for young beneficiaries. The management can continue if desired, even after a beneficiary reaches age 18 or 21.
- With proper planning (qualified legal guidance is a must), a trust can provide extra support and some of life’s comforts without disqualifying a disabled person from receiving government assistance.
- Anything that a married person leaves directly to his or her spouse will qualify for the estate-tax marital deduction—unless that spouse is not a U.S. citizen. In that event, a special marital trust is required to preserve the marital deduction.
- Individuals with children from a prior marriage may qualify assets for the marital deduction by means of a trust that pays lifetime income to the surviving spouse, then passes its assets to the children.
- The marital deduction only postpones estate taxation until the death of the surviving spouse. The precise potential for savings depends upon the years of death. For example, through 2025 every individual has about $11.2 million worth of exemption from the federal estate and gift tax. In 2026 the exemption falls to about $5.6 million, plus inflation adjustments.
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