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Beth A. Botti, CFP®, ChFC, CLU, CDFA™
Financial Consultant
California Insurance License #0G24537
612 Wheelers Farms Road, Milford, CT 06460
Phone: 203-877-6556 Ext. 169
Fax: 203-301-0736
Email: beth.botti@equitable.com
July/August 2018
Protect that Exclusion
While Congress doubled the federal estate tax exemption with the passage of the Tax Cuts and Jobs Act of 2017, a couple who files taxes jointly can still lose a portion of the exclusion if they don’t create a strategy to maximize the full amount. A credit shelter trust, also known as a bypass trust or AB trust, is one such strategy.
The Background
Congress has long debated reducing federal estate taxes, with proponents of the change arguing that estate taxes affect owners of small businesses most, as their assets may be valued highly but are mostly illiquid. These firms with little cash, but with significant illiquid assets, would need to find the cash to pay estate taxes elsewhere or liquidate their firms. This is a painful reality for some family businesses.Taxes Still Matter
Ultimately, the federal estate tax exemption was doubled to $11.18 million per individual and $22.36 million per couple, indexed to inflation. (This provision expires in 2025.) But one thing that hasn’t changed is the potential for couples to lose half of their estate tax exemption should one of them die. That’s where a credit shelter trust can come into play.How It Works
A credit shelter trust protects the full exemptions of both spouses. You would work with a professional to create the trust and include the trust’s terms in your will. It’s revocable until the death of one spouse, whose estate assets are transferred to the trust and therefore don’t inflate the surviving spouse’s estate, which could place them over the individual exemption limit. Then the trust becomes irrevocable.The trust typically allows the surviving spouse to access the trust’s income and even principal. When the surviving spouse dies, the heirs become the beneficiaries of the trust. Talk to an estate planning attorney to learn more.
GE-133484 (6/18) (Exp, 6/20)
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Duly registered and licensed financial professionals offer securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA,SIPC (Equitable Financial Advisors in MI & TN), offer investment advisory products and services through Equitable Advisors, LLC, an SEC-registered investment advisor, and offer annuity and insurance products through Equitable Network, LLC (Equitable Network Insurance Agency of Utah, LLC in UT; Equitable Network of Puerto Rico, Inc.). Equal Opportunity Employer - M/F/D/V. Equitable Advisors and its associates and affiliates do not provide tax, accounting, or legal advice or services. Representatives may transact business, which includes offering products and services and/or responding to inquiries, only in state(s) in which they are properly registered and/or licensed. Your connection to this website does not necessarily indicate that the sender is able to transact business in your state. The information in this website is not investment or securities advice and does not constitute an offer. For more information about Equitable Advisors, LLC you may visit https://equitable.com/crs to review the firm's Relationship Summary for Retail Investors and General Conflicts of Interest Disclosure.
GE-6572038.1 (4/24)(Exp. 4/26)
CFP®, and CERTIFIED FINANCIAL PLANNER™ are certification marks owned by the Certified Financial Planner Board of Standards, Inc. These marks are awarded to individuals who successfully complete the CFP Board's initial and ongoing certification requirements.
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