By Pass Trust

Who should be a beneficiary of your By Pass Trust?

What is a bypass trust? A bypass trust is a trust that is
typically formed after the death of the first spouse in a marred couple.
Initially, one may think to just to give all the assets to the surviving
spouse, but then when the the survivor passes away, all the assets pile up and
have a large estate tax. A bypass trust, also called a unified credit shelter
trust, or an applicable exclusion trust, can hold up to $2 million in assets
(2008, scheduled to increase in 2009 to $3.5 million), and the surviving spouse
can withdraw assets as they need. Note, for state estate tax purposes a lower
amount is required.

Who should be a beneficiary?

• Spouse only. This is simplest and most security for
  spouse.
• Spouse and children. Making distributions to kids is
  a great way to keep surviving spouse’s estate small, while still protecting
  him/her if he/she needs it. Be careful though if there are kids from a
  previous marriage. In that case consider naming an independent
  trustee.
• Spouse, children and others. Others’ might include an
  elderly aunt you provide care for.
• Spouse, children and grandchildren. Great planning
  idea to keep surviving spouse’s estate lower and help the entire family,
  but you must allocate GST exemption. While complex, for most its not a big
  deal since their estates are too small for complex GST planning.
• Children only. Fine if spouse will never need the
  money, but is that really advisable? Perhaps only for the
  super-wealthy.

The above is a summary of a radio show on MMFN Money
Matters Financial Network, on July 27 with host Gary Goldberg, of Gary Goldberg
Planning Services, Inc. in Montebello, New York, and his guest Martin M.
Shenkman, Esq. an estate planner in Paramus, New Jersey. Listen to the audio
clip of this segment on www.shenkmaneducation.com.

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