How should I provide for my spouse?
While many choose to leave their assets directly to their spouse, there can be good reasons to leave assets to a trust for the benefit of the spouse. (Trusts for a spouse can be created in either a Will or a revocable living trust.)
Assets in one kind of trust, often called a "credit shelter trust” or "A/B trust,” are not considered for estate tax purposes when the surviving spouse dies. This allows a married couple to double the amount they can leave free of state and federal estate taxes. (Under current law, a single person can leave $3.5 million free of federal estate taxes and $2 million free of state estate taxes. With a credit shelter trust, a married couple can pass $7 million free of federal estate taxes and $4 million free of state estate taxes.)
Assets in another kind of trust for your spouse, called a "special needs trust” or "safe harbor trust,” will not be considered when determining the eligibility of the surviving spouse for Medicaid long-term care coverage. This kind of trust, which can be combined with a credit shelter trust, allows protecting assets against the risk of the surviving spouse requiring long-term care.
Assets in a trust for the surviving spouse can also be used to ensure a later inheritance by others even if the surviving spouse remarries or changes his or her own estate plan. This is often especially important if your current spouse is not the parent of your children.
We can help you consider whether a trust for your spouse is appropriate in light of your wishes and needs.
|
|
