bsteiner wrote: ↑Wed Oct 23, 2024 3:49 pmThere are several ways to do that.friar1610 wrote: ↑Wed Oct 23, 2024 2:15 pm
Mass resident here. This is a great discussion. If this has specifically been addressed in this thread I missed it.
If a married couple is not sure whether or not a credit shelter trust is called for (e.g., due to level of assets), can a will be drafted with a provision for the establishment of a testamentary CST upon the death of the first member of the couple and at the discretion of, say, the will’s executor? The trust would then be created (or not) depending on circumstances at the time.
1. You could mandate a credit shelter trust. The trustees of the credit shelter trust could distribute the assets of the credit shelter trust to the spouse, or could direct the executors not to set up the credit shelter trust and instead distribute to the spouse the amount that would otherwise have passed to the credit shelter trust.
2. You could leave your estate to your spouse, and provide that to the extent (if any) that the spouse disclaims (waives) his/her interest, the disclaimed portion goes to a disclaimer trust. A disclaimer trust is essentially a credit shelter trust, except the spouse can't have a power of appointment over it, and can't participate in discretionary distributions to the children and grandchildren (except for an ascertainable standard such as health, maintenance, support and education).
3. You could leave your estate in trust, and say that to the extent your executors elect QTIP, the assets go to a marital (QTIP) trust, and to the extent your executors don't elect QTIP, the assets go to a credit shelter trust.
Given the low level of the Massachusetts exempt amount, most people in Massachusetts would probably pick #1, and provide for a credit shelter trust equal to the smaller of the Federal or the Massachusetts exempt amount.
This a helpful. So in a different situation where a decades old estate plan called for a credit shelter trust when the levels were much lower, the moneys could go into the credit shelter trust and nearly immediately distributed from that trust by the trustee?
If that is the case, would the inheriting spouse get future step up once assets have been distributed from CST?