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A Guide to Living Trust Planning When you are considering living trust the primary estate planning document, you should consider living trust planning in if the total estimations of the estate you and your spouse is more than 3.5 million dollars. The 3.5 million dollar figure is usually the value the federal government will allow you to be able to pass to your heirs without having to assess the amount of your estate tax. To be able to know if this will affect you; you should add the value of your real and personal property plus your financial assets, retirement assets and the death benefits from the life insurance. If the value you have exceeds the 3.5 million dollars then it is basic to consider in case you will have a credit shelter trust generally called bypass trust to be included into your document with the objective of lessening your estate taxes. Many married couples will usually use wills as ways in which they will leave properties to each other, in this plan the first to die will not use the their estate tax exemption and they will therefore lose it, this process is very expensive and it takes a long time. Having living trust you will have the ability to use the estate tax exemption and you will have the ability to avoid probate, if for example if you and your spouse have 7 million dollars one half in each of your trust, and you die, you can leave your better half 3.5 million dollars in a credit trust which will be without estate taxes. Your wife will now have 3.5 million dollars in her trust and the other 3.5 million dollars in your credit shelter trust.
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The spouse that is surviving is usually the primary beneficiary to the credit shelter trust and it will also be named as trustee. The rest of the life of the surviving spouse, the income and additionally the principal of the trust can be utilized by them for the care of their health, education and in addition maintenance. Exactly when the surviving spouse dies then the property would now have the to go to the children and it won’t be included into the estate of the surviving spouse, the entire 7 million dollars will go to the family without the estate tax and this is a living trust planning.
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If this strategy is not used 1.5 million dollars will be the estate tax will be charged upon the death of the second spouse. The bypass trust can in like manner offer protection from claims made by creditors and it will ensure that the property will remain in the family and if the surviving spouse remarries then they won’t have the ability to give the property to the new partner.