Credit Shelter Trust

A "credit shelter" trust is a revocable living trust that contains specific provisions designed to maximize estate tax savings. Credit Shelter Trust provisions are recommended when married couples have a combined net worth that exceeds the estate tax credit equivalent.

The current estate tax credit equivalent is $3,500,000, which means that each individual may pass $3,500,000 without incurring estate tax. For married couples with combined assets in excess of the $3,500,000 threshold, credit shelter provisions are designed to use each spouse's $3,500,000 exemption, thereby doubling the amount of assets that could pass to the descendants without estate tax.

Please note that the amount of the estate tax credit equivalent is a moving target. Not long ago, the amount of this credit was only $600,000. Consequently, credit shelter provisions are recommended for married couples with significant wealth.