Backdating allocation of marital assets into survivor trust
If the deceased spouse’s estate falls under the amount of his or her tax exemption, then it may not be necessary to establish a survivor’s trust.
The unused portion of the late spouse’s federal tax exemption can be transferred to the surviving spouse’s tax exemption by filling out IRS Form 706.
While the surviving spouse can access the bypass trust, if necessary, the assets in this trust will bypass his or her taxable estate after s/he dies.
The process for “funding” the Survivor’s Trust, that is, the actual transfer of title to the Survivor’s Trust after the death of the first spouse, is similar to the process for funding the Bypass Trust discussed in the last issue.
For example, a married couple has an estate worth million by the time one of the spouses die.
The surviving spouse is left with million which is not taxed due to the unlimited marital deduction for assets flowing from a deceased spouse to a surviving spouse.
It is formed with each spouse placing assets in the trust and naming as the final beneficiary any suitable person except the other spouse.
After the death of an individual, his estate is taxed heavily before his beneficiaries receive it.