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Reasons To Use A Credit Trust

http://midwestcorporatecredit.com/ ..... A Credit Trust is established in the will or living trust of a married couple. The surviving spouse is typically the beneficiary. This trust is often used as an estate tax tool by utilizing the federal estate tax credit of the first spouse to die; however, it is also a valuable asset protection tool.

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Reasons To Use A Credit Trust

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  1. Reasons To Use A Credit Trust A Credit Trust is established in the will or living trust of a married couple. The surviving spouse is typically the beneficiary. This trust is often used as an estate tax tool by utilizing the federal estate tax credit of the first spouse to die; however, it is also a valuable asset protection tool.

  2. While portability is the new thing, there are very important reasons to still use a Credit Trust instead:

  3. Creditor Protection. Post Death Asset Appreciation Certainty State Law Problems Other Issues

  4. Creditor Protection One of the best and main reasons to utilize a Credit Trust is to protect assets from creditors, second spouses, etc. There is no such protection when relying on portability. 

  5. Post Death Asset Appreciation The value of the Credit Trust's assets will be "frozen" and any future appreciation of those assets will escape estate taxes. Note that a credit trust is sheltered from GST taxes but that is not the case with portability.

  6. Certainty A Credit Trust guarantees who the remainder interest will pass to (e.g. children of a prior marriage). Portability allows the second spouse complete discretion over all of the assets, which means if the surviving spouse remarries and is the first to die in that marriage all the assets could be lost to that new spouse.

  7. State Law Problems There is no comparable state portability exemption. Losing this exemption can result in higher Washington state estate taxes on the death of the second spouse.

  8. Other Issues With portability the executor must file an estate tax return with a proper election when the first spouse dies even if there would otherwise be no such return required. If the election is not timely made, the exemption is lost. Also, if the surviving spouse remarries much, if not all, of the portability from his or her first spouse will be lost. Seattle Tax Attorneys counsel that all of these present additional expenses and traps for the unwary.

  9. Midwest Corporate Credit1S280 Summit Ave. Suite E2 Oakbrook Terrace, IL 60181 Phone: 630-376-6063Fax: 630-281-5915Email: Info@MidwestCorporateCredit.comOpen 9:00am to 5:00pm M-F Copyright 2017 Midwest Corporate Credit. All rights reserved http://midwestcorporatecredit.com/

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