The Benefits of Setting up a Marital Trust

A Marital Trust, also known as an “A” Trust, is essentially a means to postpone estate taxes in the event of a spouse passing until the other spouse has also passed. This is a very important part of estate planning for married couples, as it ensures – no matter how valuable your assets are – your spouse will not be held liable for any federal estate taxes.

Marital Trust vs. Qualified Terminable Interest Property (QTIP) Trust 

While a Martial Trust is fairly simple and leaves everything to the surviving spouse, usually to dispose of as he or she wishes, a QTIP Trust includes provisions which will dictate where the remaining trust assets go after both spouses have passed. This could be a charity, your children, stepchildren or anyone you prefer rather than the state’s designated beneficiaries.

How Does a Bypass Trust Fit In? 

This is the third trust option utilized by couples and it effectively ensures that, in order to reduce taxation on an estate, the trust goes to a designated individual rather than the surviving spouse. Although the trust doesn’t go to the surviving spouse, they can still benefit from it for their lifetime and, because they are not the owner of the assets, no taxation will be imposed upon their passing.

How Do I Set Up a Marital Trust? 

Although these concepts are fairly simple on the surface, they are in fact highly complex. There are considerable IRS restrictions on these trusts and factors such as the value of your estate, exemption amounts and more, all weigh in on the trust process. For these reasons, it’s advisable that you speak to an experienced estate planning specialist who can navigate these complex legal pathways and develop a sound, comprehensive plan to protect your assets and ensure your loved ones are properly cared for. Frank Campisano is an experienced New Jersey estate planning specialist and trusted advisor who takes a personal role in meeting all of his client’s needs. Contact us today for more information on setting up a marital trust.

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