This post concerns potential estate tax saving from establishing a separate revocable
trust for each spouse and dividing the marital estate between the two trusts.
What is a “unified credit” and how does it affect your estate plans? Forbes
recently shed some light on this topic and the tax benefits along the way.
The article, titled “The Unified Credit Freeze, Not the Philly Freeze” is one you may want to keep.
If you are not familiar with the term “unified credit,” it is the federal tax exemption given to every taxpayer for use against gift and estate taxes. You get one “unified” exemption amount to be applied in life against lifetime gift taxes, at death against the dreaded estate tax, or against some
At present the credit is pegged at a fairly nice $5.25 million, or $10.5 million for married couples. While this is cause for celebration for more than most taxpayers, whether married or
single, there still is estate planning to be done.
The article addresses “traditional” estate planning for married couples through revocable living trusts, which then create “credit shelter trusts” and “marital trusts” upon the death of the first
spouse. The article does not address the new “portability” option for estate tax minimization.
The basic teaching point of the article is to follow through on your estate planning and do not become
complacent, especially if your overall marital estate exceeds the maximum
exemption amount. Unpleasant and otherwise avoidable estate taxes could be
Reference: Forbes (May 11, 2013) “The Unified Credit Freeze, Not the Philly Freeze”