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Do you still need a bypass trust?

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in Small Business Tax

Recent changes have eroded some of the estate tax benefits of bypass trusts. And, if President Trump gets his way, the federal estate tax could be completely repealed.

Strategy: Don’t junk these trusts just yet. Although the need for bypass trusts may have diminished, and future savings are in doubt, these arrangements could still make sense.

Take a look at the big picture before you make any rash decisions.  

Here’s the whole story: In the past, well-to-do individuals often reduced their exposure to federal estate tax liability by combining two fundamental tax breaks.

1. Unlimited marital deduction: Any transfer between spouses, whether it is made during one’s lifetime or upon death, is completely exempt from estate and gift taxes.

2. Estate tax exemption: Transfers to a nonspouse beneficiary may be sheltered by the estate tax exemption. Under current law, the effective exemption amount is $5 million (indexed to $5.49 milli...(register to read more)

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