“Information Bits from the Boss: Samantha provides brief answers to clients frequently asked questions”
What if I have a bypass trust?
A bypass trust is usually a sub-trust that was created under a revocable living trust. A lot of times in the early 2000s attorneys used planning that included a bypass trust. The purpose of the bypass trust was to avoid federal estate tax by allows a decedent to maximum the federal exemption in conjunction with the unlimited marital deduction. The planning that was done allowed the executor/trustee to fund the bypass trust with the amount that would pass free of tax and the rest would go to the spouse and qualify for the unlimited marital deduction. Bypass trusts are used less frequently now because we have portability between spouses without the bypass trust. Sometimes bypass trusts are still helpful because it addresses situations where a surviving spouse might remarry. The good news is that you don’t have to have a bypass trust anymore, you can simplify your will, if you no longer want to include a bypass trust. We always recommend that you reach out to us to discuss the advantages and disadvantages of having a bypass trust.