Do You Need a Marital Deduction Trust?

Marital trusts are a type of irrevocable trust. It lets one spouse transfer assets to a surviving spouse without any taxes needing to be paid thanks to the unlimited marital deduction. It can provide benefits that are not transferred outright. Do you need to have one of these trusts? Although you may not need one, you will find that they can be quite beneficial. They are often a good idea, so you will at least want to consider having a martial trust added.

What Does Unlimited Marital Deduction Mean?

This allows the entire estate of the first spouse to die to pass to the surviving spouse. The surviving spouse is the sole beneficiary of the trust. They have the right to withdraw income and principal from the trust. The assets that are placed in the trust are going to avoid probate at the time of the first spouse’s death. Of course, when the second spouse dies, the contents of the trust will need to go through probate, as they will be included in the second spouse’s estate.

Why Doesn’t Everyone Have a Marital Deduction Trust?

You can see that there are certainly some benefits that can come from having one of these sorts of trusts. However, they aren’t as common as they used to be for a couple of reasons.

First, the federal estate tax exemption tends to be quite large. In 2022, for example, you don’t owe any estate taxes unless you have more than $12.06 million worth of assets. Most people won’t have to worry about estate taxes.

If you have a large number of assets, or you are not married to your partner, you may still find that using a trust is a good option. If you live in a start that has state estate taxes, then you might benefit from using a martial trust, as well.

Work with an Estate Planning Attorney

If you are trying to put together an estate plan, you don’t want to do it on your own. There is too much at stake, and it is far too easy to make a mistake. You want to have some help from the experts at Bell & Shah, who can do what’s right for you and your family. Sometimes, this means setting up a marital trust as part of your plan. Other times, there could be different choices that will work better for your estate.

Bell & Shah

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