Bypass Trust Will

What is a Bypass Trust Will?

A bypass trust will (also commonly called a credit shelter trust will, or an exemption trust will) is a will that is commonly used when a husband and wife own property in excess of the amount which exceeds the federal estate tax "exemption."

A bypass trust will must include and conform to all of the requirements of a basic will (see the discussion on basic wills). Additionally, it creates a family trust in the estate of the first spouse to die.

When should I consider a Bypass Trust Will?

A bypass trust will (also commonly called a credit shelter trust will, or an exemption trust will) contains trust provisions to preserve the exemption amount (sometimes referred to as the applicable exclusion amount, or the "applicable credit amount" in Internal Revenue Service terminology) in the estate of the first spouse to die, at the time of the death of the first spouse. The applicable exclusion amount in 2008 is $2,000,000; in 2009 it is $3,500,000; in 2010 it is unlimited; and in 2011 and thereafter (or until changed by Congressional legislation) it is $1,000,000.

A bypass trust will derives its name because the property held in trust upon the death of the first spouse to die (in the family trust) bypasses federal estate taxation in the estate of the second spouse to die.

I assist clients in the preparation of bypass trust wills and other estate planning documents.

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